Exclusive: Ageism law will be 'disastrous' for consumers
Plans to ban age as a factor in premiums will hit millions of people, warn insurers. By Julian Knight
Sunday 01 March 2009
Millions of motorists and holidaymakers face a sharp rise in their insurance premiums, the UK's leading insurance body has warned. If the new Equality Bill bans insurers from taking age into account when deciding on premium levels, it will have potentially disastrous consequences for most customers, warns the Association of British Insurers (ABI) in a report to be published this week.
"The danger is if we can't use age as a rating factor, insurers will have to raise premiums across the board for all age ranges," said ABI spokesman Malcolm Tarling. "The simple truth is that age is an important factor. Take travel insurance for instance, the cost of a claim made by someone over 65 is three and half times more than one made by a younger person. As for motor insurance, claims made by 80-year-olds are nearly 50 per cent more expensive than those made by someone aged 60. It is only fair that premiums reflect this extra risk.
"We are not against equality legislation, but the Government has to think carefully about how it plays this. This is well intentioned legislation which could have unintentional consequences," he said.
In its Insurance and Age report, the ABI brands the plan to bar them from using age as a factor as "unnecessary, unfair and restrictive".
The Equality Bill to be brought before Parliament in the spring is designed to ensure that age discrimination does not take place in the supply of goods and services. Ageism is already outlawed in the workplace. Campaign groups representing older people are adamant that legislation is needed to ensure fairness and that there should be no exceptions made for the insurance industry.
"The ABI think the sky will fall in if this legislation happens, which is nonsense," said Nony Ardill, a policy adviser for Age concern. "Age can still be a factor in determining premiums and we recognise that there is an increase with, say, travel insurance risk as a policyholder get older.
"However, what needs to end is the arbitrary way insurers raise premiums when a certain age is passed – someone hits 70 and suddenly their motor or travel premium doubles – and we absolutely oppose the practice of some providers which refuse to quote on grounds of age," she said.
In addition, Ms Ardill called for the insurance industry to disclose how it currently calculates premiums.
"The insurance firms hold on to these tables as a commercial secret but they should be made to show exactly how they factor age into premiums. It must be transparent and fair. At present, we suspect that a lot of their data is out of date, taking no account of the fact that we are enjoying longer and healthier lives," Ms Ardill said.
Likewise, Jack Neil-Hall from Help the Aged would like to see premiums calculated with the individual circumstance of the policyholder in mind rather than based on date of birth.
"For example, a person in his '80s who likes to drive and go abroad on holiday can be suddenly hit with a huge premium increase to renew his policy, or find himself unable to get insurance at all, only because he has breached some age barrier imposed by the insurer," Mr Neil-Hall said.
"Age is used as a broad paint brush by insurers but it's much more sensible and fairer to look at individual circumstances," he said. "That same person may never have smoked, be in good shape and have a recent medical to prove it. Why doesn't the insurer ask to see it?"
But Mr Tarling says it's not cost effective or practical for insurers to do an in-depth analysis of individuals as suggested by Help the Aged.
"If we have to start asking for medicals, it will cost far more to formulate quotes, which will raise all premiums and the whole process will be delayed. Remember, a lot of insurance is now bought online and that could become impossible if we have to do what the campaigners want," Mr Tarling said.
He also denies that insurers in effect abandon older customers. "We don't refuse to quote purely on age. There are insurers who specialise in offering cover to older people. The market is working. Our report shows that 99 per cent of people who want travel insurance get it," he added.
As for motor insurance, the ABI says anti-ageism campaigners are not seeing the full picture: "The link between age and accidents is undeniable. For example, the under 25s are much more likely to have crashes as they are less experienced and that is why their premiums are much higher. If we weren't allowed to take this into account, it would inevitably raise premiums for older drivers," Mr Tarling said. But campaigners maintain there is a problem and only legislation will help. "People generally have an image of an older person as unable to think clearly or do things.The ways we look at older people are out of date," Mr Neil-Hall said.
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Energy switching app Voltz allows users to switch with just a few taps
Money Insider: Smart alternatives to the pensioner bond
Number of serially under-performing investment funds has increased by a fifth, survey reveals
Bank-beating exchange rates on your international payments
- 1 Benedict Cumberbatch says Hollywood is better for black British actors
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 3 UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
- 4 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 5 Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village