For years, older customers have complained that they are unfairly treated by many insurers, having to pay higher premiums and finding it hard to get cover at all.
The new Equality Bill has the UK’s insurance trade body in at tizzy, as it fears that long-term promises to bar insurers from using age as a rating factor may actually become law. The Equality Bill to be brought before Parliament in the spring is designed to ensure that age discrimination does not take place in the supply of goods and services. Ageism is already outlawed in the workplace. Campaign groups representing older people are adamant that legislation is needed to ensure fairness and that there should be no exceptions made for the insurance industry.
Plans to ban age as a factor in premiums will hit millions of people, warns the ABI. It even suggests that some insurers may stop offering products, but as there are scores of insurers on almost every type of personal product, the threat is as hollow as individual carmakers threatening not to make cars. Millions of travellers face a sharp rise in their insurance premiums, if the new Equality Bill bans insurers from taking age into account when deciding on premium levels, it warns.
The ABI repeats ‘facts’ which miraculously have not changed over the years; on travel insurance the cost of a claim made by someone over 65 is three and half times more than one made by a younger person.
Nony Ardill of Age Concern is dismissive, “The ABI think the sky will fall in if this legislation happens, which is nonsense. Age can still be a factor in determining premiums and we recognise that there is an increase with, say, travel insurance risk, as a policyholder get older. However, what needs to end is the arbitrary way insurers raise premiums when a certain age is passed – someone hits 70 and suddenly their travel premium doubles. We absolutely oppose the practice of some providers that refuse to quote on grounds of age. The insurance industry refuses to reveal details of claim and premium figures by age as a commercial secret. They should be made to show exactly how they factor age into premiums. It must be transparent and fair. At present, we suspect that a lot of their data is out of date, taking no account of the fact that we are enjoying longer and healthier lives."
Jack Neil-Hall from Help the Aged wants premiums calculated with the individual circumstance of the policyholder in mind rather than based on date of birth, “Age is used as a broad paint brush by insurers but it is much more sensible and fairer to look at individual circumstances. That same person may never have smoked, be in good shape and have a recent medical to prove it. People generally have an image of an older person as unable to think clearly or do things. The ways we look at older people are out of date."
The structure of the UK population is changing radically. Life expectancy is increasing rapidly and it is predicted that by 2050 men could expect to live for a further 27 years and women 28 years once they reach 65. A new report from Standard Life says that one in three of those who would retire within the next two decades, will not vegetate after 65. They want to continue working, set up new businesses, travel widely and explore new experiences. Insurers need to work out how to offer better more affordable insurance for this sector, and bring their trade body into the real world.