Older motorists and travellers have long been the pariahs of the insurance industry, often being charged over the odds or even refused cover altogether, but they could find life a little easier following an announcement this week.
Under an agreement which came into force on Friday, members of the Association of British Insurers (ABI) and the British Insurance Brokers' Association (Biba) will automatically refer customers to an alternative provider or Biba's "Find a Broker" service if they are unable to offer cover because of age restrictions on their range of products.
This follows a move by insurer LV, which has stated it will scrap the maximum age limit for new car insurance customers (they used to refuse to cover drivers over the age of 86) having already got rid of its travel insurance upper age limit.
These developments could signal the beginning of better deals for older insurance customers, but many experts say there is still a lot to be done. "Driving is such an essential element of older people's wellbeing and without access to a car the risk of isolation would be much greater," says Debora Price from the institute of gerontology (the study of older people) at King's College London.
Financial analyst Defaqto found that of the 448 annual travel insurance policies on the market, 57 (12.7 per cent) have an upper age limit of 64, and 78 will not insure those aged over 74. And, of the 232 car insurance policies, it found that 30 (12.9 per cent) have an upper age limit of 75, and 54 stop at 80. There are still providers offering policies to older customers; Defaqto found that of those that state a maximum age the average is 81.4 years, and 17 policies have no upper age limit at all, but these figures do show that options can be slim.
"As age increases the number of available policies decreases, for example someone aged 86 can choose from only 25 per cent of the available policies," says Mike Powell, an insight analyst for general insurance at Defaqto.
ABI and Biba's move could be a sign that insurers are prepared to relax their restrictions, but it remains to be seen if more people will be offered policies (they still have to go through the underwriting process) and, crucially, if it will have any affect on prices.
We asked comparison site Moneysupermarket to look at premiums for various age groups for a retired male driving a Ford Fiesta for 10,000 miles a year with five years' no claims discount. They found that the average annual cost for a 70-year-old was £212 but at 80 the average premium rose to £341 and then, at 90, costs escalated to an eye-watering £1,022.
Travellers will also get a nasty shock as they get older; average premiums for a 70-year-old male looking to spend a week in Spain came out as £23.04, but rose steeply to £55.13 for an 80-year-old and £90.67 for a 90-year-old.
There may well be elevated risk associated with motorists and travellers over a certain age and under the new arrangement the ABI will publish claims data broken down by age to highlight the cost of insuring older customers. But even with this data, Dr Price questions if it is fair to apply blanket premiums based purely on age. "There has been a lot of research in the past few years and the statistical evidence for the extent to which older people are a higher risk is very mixed – the higher premiums are not really evidence-based," she says.
It's not all doom and gloom, fortunately, as there is a great deal of variation between providers. Specialists such as Saga, Staysure and Age UK are a good starting point as they offer products which are tailored to older customers and have no upper age limit. But, it doesn't always follow that specialised policies are the cheapest, so don't dismiss regular insurers without comparing costs; mainstream insurers such as LV, Tesco, Barclays, Nationwide and Swiftcover offer insurance to 90-year-olds. Going online and using comparison websites is usually the best way to find competitive deals.
There may be other ways to cut costs. For car insurance, for example, check that your premium reflects your usage and mileage. So, if you do not take your car to work ensure you only pay for social and domestic use, which is cheaper than cover that includes commuting. Similarly, if you only drive 4,000 miles a year your insurer could offer a discount.
On the travel insurance side, look for companies that include some medical conditions free of charge and if you go abroad at least twice a year get an annual, multi-trip policy, which should be cheaper than single-trip policies.
You should also play around with excess levels – the amount you pay in the event of a claim – to reduce your premium. You do need to be careful though; as The Independent on Sunday reported last week increasing the excess can sometimes be a false economy. Generally, a voluntary excess of around £100 will reduce your premiums significantly, but check whether increasing it any further will make a big enough difference to cover having to fork out a huge sum when you claim.
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