ABI: Age restriction would lead to higher insurance costs and less choice
All customers are likely to face higher insurance premiums and less choice if the Equalities Bill restricts the use by insurers of age to help them assess risk, the ABI (Association of British Insurers) warns in a report published today. The cost of travel insurance alone could double if age could not be used as a risk factor.
The report: Age and Insurance: Helping older customers find the cover they need shows that restricting the use of age by insurers would be:
. Unnecessary. Insurance is widely available for all customers, regardless of age. Independent research undertaken for the ABI shows that 99% of older customers are already able to find motor insurance, with 98% able to obtain travel insurance.
. Unfair. Taking age into account, where it is relevant, ensures that prices are fair to all, including older customers. In motor insurance, the average cost of a claim made by someone aged over 80 is nearly 50% higher than one made by someone aged 60. In travel insurance, the average cost of a claim made by someone aged over 65 is nearly three and a half times more than one made by someone under age 50. Restricting the use of age would mean that insurers would not be able to take account of differences in risk among older customers, unless a more intrusive and costly approach, such as individual medical assessments, were used. The additional costs would lead to higher premiums.
. Restrictive. Without sufficient age-related information, insurers would be unable to offer competitively priced cover to accurately reflect the risk. This could lead to some insurers ceasing to offer cover, and discourage those insurers who currently specialise in providing cover for older customers.
Nick Starling, the ABI’s Director of General Insurance and Health, said:
“The insurance industry is committed to treating people fairly, and is opposed to unfair discrimination. The Government, organisations that represent older people and the insurance industry agree that premiums should reflect individual risk.
“Insurers only use age where it is relevant, and restricting their ability to do so would rebound on all customers, through higher premiums and less choice. Any legislation should tackle genuine discrimination, not insurance where the use of age helps to ensure a wide range of products at competitive prices.
“Our research shows that travel and motor insurance is widely available to older customers. However, we recognise that some people may need more help to find the right policies for them. That is why we are working with our members, the Government and age charities to improve access to information about suitable insurance products.”
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Notes for Editors
1. Enquiries to:
Jonathan French 020 7216 7392 (Mobile: 07958 330 480)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler-Coyle 020 7216 7415 (Mobile: 07968 364 302)
2. A copy of Age and Insurance – helping older customers find the cover they need is available on: www.abi.org.uk.
3. Research into the availability of motor and travel insurance for older customers was conducted by CRA International on behalf of the ABI. CRA used a conventional market impact assessment, in line with the Financial Service Authority’s economic-based approach to cost benefit analysis.
4. The ABI is the voice of the insurance and investment industry. Its members constitute over 90 per cent of the insurance market in the UK and 20 per cent across the EU. They control assets equivalent to a quarter of the UK’s capital. They are the risk managers of the UK’s economy and society. Through the ABI their voice is heard in Government and in public debate on insurance, savings and investment matters.
5. An ISDN line is available for broadcasts.
Copies of all ABI news releases, together with other information from the Association, can be seen on our website www.abi.org.uk.