The Association of British Insurers (ABI) has published a report warning that customers are likely to face higher premiums and less choice if insurers are restricted from using age to help assess risk under proposed legislation.
The Equality Bill, announced in the Queen's Speech in December 2008, is expected to ban age discrimination in the provision of goods, facilities or services, including in insurance underwriting. The Bill also aims to achieve other goals such as consolidating legislation, increasing transparency and strengthening enforcement in discrimination cases.
A restriction on age discrimination should make it easier for the elderly to obtain motor and travel insurance, which some argue is difficult at present due to a perceived higher risk. However, in its report entitled "Age and Insurance: Helping older customers find the cover they need," the ABI said that 99% of older customers are already able to find motor cover and 98% can obtain travel insurance. It further said that average travel and motor claims made by elderly people are of substantially higher value. Not being able to take age into account could mean that more intrusive and costly approaches, such as individual medical assessments, would be needed. The additional costs would lead to higher premiums. The ABI also said that some insurers may cease to offer cover to older customers if they were not able to obtain sufficient age-related information.
"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," said the ABI's Director of General Insurance and Health. "Any legislation should tackle genuine discrimination, not insurance where the use of age helps to ensure a wide range of products at competitive prices."