Columbia Threadneedle’s £60k grant to research UK’s poverty premium

Fair By Design says insurance risks cause income shocks that cause debt

Columbia Threadneedle Investments’ charity has dedicated £60,000 in a grant to Fair By Design to research barriers to financial inclusion in insurance.

The Columbia Threadneedle Foundation will utilise funds from the Threadneedle UK Social Bond Fund, managed by Simon Bond (pictured), which contributes a share of its annual management fee to the firm’s charity, to explore the root causes of UK poverty and in particular in individuals’ insurance, which has been described as the contributor to the poverty premium.

Fair By Design, run by the Barrow Cadbury Trust, explained “life/income shocks” are one of the main reasons people now fall into problem debt in the UK. These shocks are frequently the result of insurable risks, such as loss of income due to ill health, a fire, burglary.

It added many people on low incomes do not have the financial resources to invest in securing their financial futures as:

  • They struggle to afford appropriate insurance because they are deemed to be a higher risk.
  • They’re not able to access insurance that meets their needs due to policy exclusions or the expense of a comprehensive product.
  • They are being locked out of insurance altogether.

This problem is set to increase, the organisation said, as the insurance market moves from a pooled risk approach to one of individualised risk, with risk transferring from insurers and government to individuals.

Martin Coppack, director of Fair By Design, commented: “As companies become more able to individually price risk and move away from more mutual forms of pricing we are being left with a two-tier market – one that works for the healthiest and wealthiest in society. The poverty premium means households often go without insurance, and they often have to resort to other more costly ways to protect themselves such as expensive credit.

“To level up our communities, regulators, policymakers and industry need to work together to make sure people on low incomes can access the protection they need at a price they can afford.”

The Columbia Threadneedle Foundation grant will fund a research project looking at how the poorest in society can secure more and better access to affordable insurance.

Alison Jefferis, chair of Columbia Threadneedle Foundation, said: “We’re very pleased to be funding this important work, which will contribute to the Foundation’s aim of improving individual lives while also driving fundamental social change – in this case universal access to affordable financial services that support decent standards of living. This is our first major project funded by proceeds from the Threadneedle UK Social Bond Fund, reflecting the ethos of the fund as well as Columbia Threadneedle’s broader desire to have a positive social impact in the UK.”


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...