A couple of months ago I wrote about the latest EU ruling which banned the use of gender in the rating of insurance products.
Here we go again I hear you say and to some extent you are probably right although there does seem to be a bit more of a split in views on this one.
Many experts are now predicting that is not a matter of if, but when, a further ruling will be made banning the use of age to determine insurance premiums.
I had assumed that such discrimination was already illegal under the Equality Act but upon examination I find that although it covers all areas like race, religion, sexuality and age insurance is listed as an exception.
The Equality Act was meant to end age discrimination yet the proposal to allow insurers to continue to operate age limits undermines the very spirit of the legislation.
My initial feelings when hearing about the latest proposals was that typically this would just mean that insurance which was previously not available due to age, such as Travel, would now become available albeit at a price.
However we need to bear in mind that some classes of insurance are actually cheaper if you are older.
Motor and Household premiums are typically cheaper if you are over 50 because statistically you are less likely to have a claim. Premiums for over 65 year olds on Household are generally cheaper because the policyholder is likely to be retired and at home in the house more often.
So, it would seem that this proposal may affect all ages groups in different ways.
It is clearly not right that at 65 it becomes very difficult to obtain Travel Insurance especially given that after retirement this is the very period in your life when you may be able to travel for extended periods.
The problem with Insurers approach is that this is blanket underwriting based on one particular risk factor – individual circumstances and condition of health are just not considered on a policy by policy basis.
For the time being Insurers will continue to price on age simply because it is easy and until the EU steps in this is unlikely to change.
I have also come across one proposal that seems to make total sense and may make insurers think twice before declining risks based on age – this proposal is called ‘Signposting’
At the moment an insurer can refuse to accept a policy because of age and no other consideration and that’s where it ends basically.
Signposting would mean that insurers are obliged to point such declined enquiries in the direction of an appropriate provider.
I think this is a great idea, so if you are old or young, if an insurer will not cover you then they must suggest an alternative.
There seems to a very real chance that this will become the compromise that is struck and may just avoid a further EU ruling being imposed – only time will.
I would be very interested to hear other views on this subject, as always there will be two points of view but again this promises to be very topical in coming months.
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