As much as the planned Equality Bill is intended to ensure a better treatment for older insurance customers, there are fears that the consequence on most policyholders could be very grave.

Concerned that older people are increasingly facing restrictions by insurance firms on the basis of their age, including on travel and car insurance, the government decided there should be a new law to put a stop to it. But how it intends applying the law in relation to the insurance industry is still not clear.

ABI opposition to new law

Nonetheless, there have been an increasing opposition with the latest coming from the Association of British Insurers (ABI), which argues that the move, as it affects travel insurance, will only result in making things more difficult for every traveller, as the cost of policies could multiply.

In a report in which it articulated its concern, the trade body insisted that age cut-offs were justified. It argued further that in motor insurance, for instance, policyholders aged over 80 years make nearly 50 per cent more claims than those aged 60, on average. Against this background it said banning age as a risk factor was something it was opposed to.

Similarly, the ABI’s Director of General Insurance Nick Starling explained that in travel insurance the average cost of a claim made by a customer over 65 year of age was almost three and a half times more than those made by anyone under the age of 50.

“Taking age into account, where it is relevant, ensures that prices are fair to all, including older customers,” said Mr Starling.

If forced to do away with age-related information the body warned further that the industry could end up not being able to offer polices at competitive prices and the impact will be felt by every customer. “All customers are likely to face higher premiums and less choice,” added the official.

The majority will suffer

The above argument has also been advanced by a leading insurer, AA, which expressed its opposition to removing age discrimination on the ground that it could result in premiums doubling for most middle-aged motorists.

It argued further that a consequence of age equality in relation to car insurance premiums is that while a few will have their premiums reduced the majority will suffer in the end.

Given the above position an important issue to consider is whether the number of those currently suffering as they are excluded because of their age is significant enough to warrant making a huge number suffer in a bid to reverse this trend. Various studies have been done to ascertain the number but the findings are conflicting. While a study by ABI involving 300 customers aged over 65 revealed that not less than 98 per cent of participants were not excluded, another survey by Age Concern found a different situation. It, instead, showed that more than 10 per cent of people aged 75 were turned down for new motor insurance with age being the main reason.

As the Equality is being discussed one thing government might want to consider is how its decision could affect either sides mentioned, negatively and positively, and ensure that a middle position is taken. Even as discrimination on the basis of age needs not be allowed to continue, but in reversing it the interests of those who will be affected for not fault of theirs need to be considered.