Income inequality has risen, with negative implications for economic growth. It can also curb insurance buying by reducing affordability of assets and associated insurance coverage, and exacerbate lack of financial inclusion. Specific insurance solutions can help low income households be more resilient as the widening income gap continues.
Income inequality has widened in many countries. In 2016, the income share of the 1% richest people in the US was about 20%, almost double that in 1980.
Higher income inequality lowers economic growth and resilience. It can also impact insurance demand.
For middle income households experiencing financial strain, insurance purchases are among the first to be sacrificed.
Broader financial inclusion so that more low-income households have bank accounts is key to enabling greater uptake of insurance.
Insurers can extend their reach to lower-income and unbanked groups through microinsurance and digital/ mobile distribution channels.
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