Brokers want exception to equality bill

The government is being pressed to make an exception to new equality laws so that insurers can continue the controversial practice of refusing cover to elderly customers.

As part of its Equality Bill, the government is considering ways to improve access to insurance for older people. It says one in five is unsuccessful in getting quotes for motor and travel cover.

Campaigners for the aged want insurers to be forced to drop upper age limits on motor and travel policies and “crude” age bands that see travel premiums doubling on a 66th birthday, with no change to the underwriting risk.

But in a submission to a parliamentary select committee examining the bill, insurance brokers argued that access could be improved without forcing the industry to quote for all.

“Affordable cover is available if the government were to support a ‘signposting’ solution,” said the British Insurance Brokers’ Association (Biba), the UK’s general intermediary organisation.

Under this proposal, Biba suggested that customers could be “signposted” by the declining company to an independent source of information about competitors who could help.“Our solution does not force insurers to cover areas where they have never dealt in and do not understand – particularly when there is no market failure, it said.”

Biba identified price comparison websites where older customers are most often turned down for cover and not given advice on where to go. Biba also cited banks and direct insurers.

“The result is the customer feels let down and left without insurance protection,” Biba said.

Under its proposal, Biba suggested that customers could be “signposted” by the declining company to an independent source of information about competitors who could help.

“There should be a suitable exception [to the bill] to allow the insurance industry to continue a system of risk-based pricing, but with the support of the signposting solution,” said Biba, adding that it was against the unfair use of age bands.

However, Age Concern described the “signposting” proposal as “superficially attractive”.

“Effectively, all older people’s business would end up with a few underwriters, while other companies would be free to carry on ‘cherry picking’ business from younger consumers,” the charity said. “Prices for older people could be higher as a result of reduced competition.”

Signposting also received a lukewarm response from the price comparison industry, which rejected suggestions that it couldn’t help older customers.

Moneysupermarket.com, the country’s biggest comparison website, found that of the 17 quotes provided for an 80-year-old traveller, four were about £90 or less with the top quote being £300.

“Biba is wrong to single us out for not helping customers in these age brackets because we can,” said Ian Williams, of Moneysupermarket.com.

However, the “signposting solution” won the backing of the insurance industry, which wants to be excluded from the bill – even though a provision may allow it to continue to practise age discrimination – but only if it can be justified.

“Our concern is this provision would force insurers to publish information on how we price risk, but premiums are not just based on objective criteria,” said Nick Starling, director of general insurance at the Association of British Insurers (ABI).

“Many other factors are taken into account, for example, the insurer’s appetite for risk and share of the market.”

Insurers don’t agree with the view that access is a problem for older consumers with its research showing only a tiny percentage had been refused cover.

“The market is working and we want to make absolutely certain that we can continue to differentiate on the basis of age,” said Starling.

“The market is highly competitive now but we are concerned that premiums will rise across the board if we are required to quote for all ages.”

Meanwhile, campaigners for the aged have also been lobbying government to press ahead with reforms of practices it says are harmful to older consumers.

“It may be that certain older people do present an unacceptably higher risk to insurers – but this will be because of their health and their claims history, not because of their age alone,” said Age Concern.

“We do not want to stop insurers making fair commercial decisions as long as these are not based on arbitrary assumptions about age.”