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The
ABI has warned that customers could see price hikes
and less choice in the insurance market if the Equalites
Bill stops insurers using age as a pricing factor.
The
cost of Travel Insurance could double if age could not
be used as a risk factor as underwriters try to compensate
for the inability to use age as a factor. The AA has
also said that car insurance premiums for the majority
could also double.
Within
its report, "Age and Insurance: Helping older customers
find the cover they need", the ABI state that restricting
the use of age by insurers:
- 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.
Tthe
ABI’s Director of General Insurance and Health,
Nick Starling. 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.”
If an insurer does not want to take on the risk a particular
age group then they ought to be compelled to refer people
to an independently accredited list of providers who
will be able to quote.
The
AA's comment
Simon
Douglas, director of AA Insurance, said: "An unintended
consequence of applying age equality to car insurance
will be a be reduction in premiums for a few at each
end of the age range but an increase for the majority.
"There
is a significantly greater likelihood of a claim being
made especially by young and inexperienced people. Similarly,
as age advances, the likelihood of being involved in
a collision increases."
The
lowest risk is presented by drivers between 45 and 65,
for both sexes. "For example, young men aged under
21 are 10 times more likely to make a claim than someone
aged 35 or over. Similarly, the size of claim for a
young male driver over is £4,200, compared with
£1,400 for a male aged 35 or over. That's why
premiums are high for young people. Removing age discrimination
could well double premiums for the majority of middle-aged
drivers, of both sexes."
Saga
response
Saga
appeared to endorse the ABI’s view claiming the
issue is about people knowing where to go for cover
so they can continue to enjoy life to the full.
A
Saga poll of over 10,500 people aged over 50 found that
25% of the over 65s had been turned down for travel
insurance because of their age. But 93% of these had
gone on to find insurance from another company.
Source
- InsuranceTimesss
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