Is there a role for insurance in reducing income inequality?

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Lower income households tend to be disproportionally affected by unexpected life events and economic shocks. Unlike higher income households, they often have fewer financial buffers at their disposal and lack comprehensive insurance coverage.

Enhanced access to financial services for low income households and small businesses can help to reduce their vulnerability and increase their resilience. For example, some insurance solutions can provide compensation to households affected by financial shocks (such as a fire, sudden unemployment or a personal injury). In many cases, such risks are not at all or only partially covered by social security systems.

The various insurance solutions that can increase both individual and collective financial resilience in the EU were discussed during a CEPS roundtable on 14 September 2022. This report summarises these discussions with decision makers, academics, business representatives and other key stakeholders.

Fredrik Andersson is a ECRI researcher and a research assistant in the Financial Markets and Institutions Unit at CEPS. Willem Pieter de Groen is Senior Research Fellow and Head at the Financial Markets & Institutions Unit at CEPS.