Calm down! If we say you're too old, you won't get cover
Insurers and lenders have been accused of penalising older people by imposing unfair age limits.
Saturday 20 February 2010
An age charity has accused finance firms of discriminating against older people. New evidence from Age Concern and Help the Aged shows that half of motor insurers and a third of travel insurers automatically exclude people aged 80 or older, irrespective of their health status.
"It defies belief that in 2010 a business is still able to refuse to deal with someone because of the date on their birth certificate," says Michelle Mitchell, the charity director.
"We accept age should sometimes be taken into account in pricing insurance, but automatic age limits completely undermine the message the Equality Bill is supposed to be sending. Our fear is that household name insurers will see the new law as a green light to shut their doors to older customers."
The charity asked a number of motor insurers to quote for an 84-year-old man and an 87-year-old woman. Half of those contacted refused to offer cover.
The list of shame includes well-known names such as Admiral, Axa, the Co-operative, eSure, Halifax, Sainsbury's and Tesco, who all refused cover for anyone over 80. Meanwhile Aviva, M&S, Nationwide and LV= all mentioned 85 as their upper age limit.
The charity's research shows that it's not just the over-80s who are affected – those in other age groups also experience ageism.
Access to insurance becomes increasingly patchy once someone hits 65, while some companies refuse to provide insurance quotes to people in the 65-79 age bracket.
Insurers claim that risk profile data – which they use to set premiums – shows that beyond middle age drivers have more accidents as they get older.
"Premiums for motor insurance are determined by the risk profile of individuals," explains Lana Clements of More Than. "Older drivers do present genuinely higher risks than drivers between the ages of 25 and 65, which is why age is a factor in the way that motor insurers calculate prices. But this would also apply to drivers under the age of 25."
Even if older people are accepted for insurance, they are then often charged over the odds for cover.
The research shows that quotes for travel insurance to Spain vary from £11 to £72 for 60 to 65-year olds (a £61 spread), but the price rockets to between £40 and £413 for people aged 80 plus – a £373 spread.
"This evidence points to the uncompetitive nature of insurance for older people and a market which clearly isn't working," says Mitchell.
However, Will Thomas, head of car insurance at Confused.com, says that some insurers actually offer older people up to the age of 75 better prices. "In contrast to popular opinion, our research suggests that insurance providers seem to rate on the idea that experience comes with age and therefore those between 60 and 75 can look forward to the best insurance prices of their lives in their twilight years," he says.
Some insurers say they don't discriminate against older people. "We don't penalise the older generation for being active and able to drive," says Andy Goldby, director of pricing and underwriting for Direct Line car insurance. "Direct Line will insure new customers up to the age of 89 over the telephone, as long as they meet our underwriting criteria. We will continue to insure existing customers up to the age of 99."
Age Concern and Help the Aged say that older people have also experienced problems when organising other areas of their finance.
Lenders appear to operate unofficial upper age limits on mortgages and personal loans and often won't lend to people aged 65-75 plus.
Financial packages such as bank accounts which offer free insurance often have upper age limits which mean older people lose out on the benefits.
Some people even report being turned down for car hire, with some smaller firms saying they are restricted by their insurers.
Ageist attitudes are also a big problem for older people. The charity says it has heard stories of financial advisers refusing to speak to older people unless they are accompanied by their younger family members.
"Older people are rightly disappointed and angry when they are refused access to financial products or made to pay more for them simply on account of their age," says Annie Shaw of CashQuestions.com.
"While the reasons that financial providers give, such as increased insurance risk, may in some cases hold good, in many instances denying products on age grounds is just a cover for rationing, laziness or plain discrimination."
Her view was reinforced in a telling Teesside court case last month, when a Middlesbrough-based customer adviser for Halifax bank was slapped with a six-month suspended sentence after stealing £1,650 from the account of an 86-year-old woman.
But when the pensioner noticed the unauthorised withdrawals on her statement and complained to the bank, she wasn't believed. Halifax staff simply presumed that she had forgotten signing the withdrawal slips.
Andrew Hagger of Moneynet .co.uk says older people suffer indirect discrimination from the increasing tendency to launch online-only products. "This is indirectly impacting those without access to, or who are too scared to use, the internet, which includes many older people," says Hagger.
"Because the online delivery channel is more cost-effective, then some of these efficiencies are passed on in the form of better rates, so older people who are not online suffer from far less choice and miss out on some of the better rates.
"Looking at savings, the over 50s market was very competitive about three or four years ago, but there is certainly less focus on this area now, and in the majority of cases you'll find a better rate of interest on a savings product with no age limitations."
"The number of people age 65 years and over is expected to rise by 65 per cent in the next 25 years to more than 16.4m by 2033," points out Michelle Mitchell.
"It is time banks and other financial services providers woke up to the ageing profile of their customer base and ensured their products and services met their needs. Older people should be treated as individuals and assessed on the basis of what they can afford, rather than the date on their birth certificate."
Sage advice: Getting deals
There are ways to get round age restrictions on financial products, says Annie Shaw of CashQuestions.com. "Older people refused credit cards on income grounds may be able to apply for cards designed for people with a poor credit record. These may have high interest rates, but this won't matter if the card holder repays the balance each month."
She also suggests that equity release could replace a conventional mortgage for older borrowers.
"There are also the packaged bank accounts which include free travel insurance with a high age limit. It could be worth opening one of these accounts simply to get the insurance," says Shaw. "The same goes for the M&S Credit Card Premium Club, which offers free annual travel insurance for anyone under the age of 80 and other perks for a £10 monthly fee."
Age of despair: 'No' to mortgage, travel insurance and breakdown cover for the over-70s
Anne Hill, 71
Anne Hill says she is "hopping mad" about the age discrimination she experienced when trying to get a five-year £30,000 repayment mortgage to refit her kitchen. She and her husband are financially comfortable and have six pensions between them and own a £400,000 house. Anne saw a good mortgage deal from the Co-op and went along; everything was fine until they asked her age. Their maximum age is 70 so she was automatically disqualified.
"You go through the whole palaver and they turn you down at the very end – there is nothing on the wall to say they won't lend over 70, nothing in the brochure," she says. "I just want to be treated like everybody else on the basis of what I can afford. They don't want to admit they discriminate but they do."
"There is no reason at all for an older person who meets income requirements not to have a mortgage the same as anyone else," points out Annie Shaw of CashQuestions.com. "For example, it makes a lot of sense for an older person to take out a mortgage in order to undertake home improvements prior to selling the house for a better price and downsizing."
David Pinder, 82
David Pinder of Kent went online to get car breakdown insurance, but was denied insurance because he was over 80. "What has the age of a driver to do with the likelihood of a vehicle breaking down or getting a puncture? It seems to me to be a very blatant example of age discrimination," he says.
John Craig, 70
John Craig, from Birmingham, held a Premier Account with his bank which qualified him for free travel insurance. However, on turning 70 he was asked for a payment of £79 travel insurance for a holiday to the States. "This is discriminatory and totally unjustified. It is ironic that someone like me, who is in reasonably good health, is charged £79 because I am 70; while my wife, who is diabetic, gets free travel insurance because she is younger."
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