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Older and fitter people but not wiser insurers?

Older and fitter people but not wiser insurers?
Recent official figures from the government on life and health plus new research from reinsurance gurus Swiss Re agree that we as a nation are living longer than experts predicted a few years ago, and staying healthy longer.


The recent and planned changes in the retirement laws may make all of us able to work for longer before retiring, but change is happening faster than ever.


There are some serious implications. The longer people live and the more new often costly medical techniques that enable life and health, the larger the number of people the NHS treats and the more often they treat people during their lifetime.


When state pensions were originally introduced people lived five or so years before dying. Now people tend to live 15, 20 or 25 years after retiring. The current and future state and private pensions shortfall is huge and getting bigger. That governments and employers have plundered pension funds in the last two decades, as an easy source of money does not help.


There are two scenarios. One where people work for 50 or 60 years in their usual jobs before retiring. The other where people work those jobs for 40 years and spend the rest of their life in other part-time work or working for themselves to make ends meet.


Either way, many health and life insurers have got blinkers on. Some have removed all upper age limits. But the majority still cap new business at anywhere between 60 and 70.Particularly on life and income protection, most insurers stop offering cover to existing customers at any time from 55 to 70.


All the recent research suggests that people stay fit and healthy for many years, often long after the out of date and arbitrary age limits imposed by insurers.


The upcoming age discrimination laws will force most companies to stop taking age into account when providing goods and services.


The insurance industry has managed to wheedle and plead an exception to the law.


Much depends on how tough the government wants to be. To comply with the exception insurers must both prove they have good cause to turn down fit and healthy people just because of age. And they must suggest where people they turn down can get cover.


It is unlikely that the signposting rule will change.


But insurers may find it tougher than expected to turn people down. If they have always avoided “ older “ customers they will have no real evidence of their own to back up their views that are based more on insurance myth and gut feeling than statistics. The government has already indicated that the current industry based evidence is very shaky; being very similar to the so-called evidence on male versus female risk that the government and EU courts dismissed as mostly useless.


The new figures on life and health are from the government’s own statistical service, so cannot be dismissed easily. Neither can the research from reinsurers Swiss Re on who many insurers rely for trend detail.


Insurers may just stick their head in the sand, go ‘la la la I cannot hear you ‘ and carry on as before.


The brighter ones will remove or raise age limits. After all –who in their right minds would cut themselves off from the biggest and fastest growing sector with the largest disposable income?


Granddad is no longer puffing his pipe by the fire; he is away bungee jumping in the jungle. Granny is no longer babysitting; she is off ski-ing off–piste and planning her voyage round the world in a canoe.


To all insurers – take your age blinkers off.
Health insurance hot topic: September 2011