Asked by
To ask Her Majesty’s Government what discussions they have had
with representatives of the insurance industry regarding the use
of age as a trigger for substantial increases in premiums for
travel and other related cover.
(Lab)
My condolences too for a very great woman. I beg leave to ask the
Question standing in my name on the Order Paper.
(Con)
The Government continue to work closely with insurers and the
independent regulator to ensure that everyone has access to
suitable and affordable insurance. The Financial Conduct
Authority requires firms offering retail travel insurance to
signpost consumers to a directory of specialist providers if they
are declined cover, offered cover with an exclusion or charged a
significantly higher premium for the medical coverage
element.
(Lab)
My Lords, in March 2020 there was an outburst of gross
discrimination against people on age grounds that nearly locked
people in their own dwellings because they had reached the age of
70. Perhaps the Minister can go back to the Association of
British Insurers, which produced a review in 2018, and point out
that many of its members are raising exponentially the fees
required for cover for people over 70, 75 and 80. Given that only
7% of over-65s claim in any given year, surely it is possible for
us to ensure that people who are living longer, fitter and able
to travel can do so and have the cover necessary to make that
possible.
(Con)
My Lords, travel insurance is fundamentally designed to cover
medical expenses, where age can be a risk factor. The Government
do not intend to intervene in commercial decisions made by
insurers, as this could damage competition in the market. The new
rules that I referred to in my Answer came into place in April
2021—after the example the noble Lord gave. They mean that firms
need to signpost consumers to a directory of specialist providers
if the medical premium they are being charged is significantly
higher than normal. The Government continue to want to promote
financial inclusion, and have the Financial Inclusion Policy
Forum in place to ensure that they consider all questions around
financial inclusion.
(LD)
My Lords, people with serious pre-existing medical conditions
often find it difficult to get travel insurance. As the Minister
has said, in April last year the FCA introduced new signposting
rules to make it easier. Can the Minister reassure the House that
insurance companies and brokers are currently complying with the
signposting rules and that this signposting is as prominent as it
should be?
(Con)
My Lords, it is for the Financial Conduct Authority to regulate
the market and ensure its rules are being followed. It has the
resources to do so, and I will follow up with the FCA to see its
judgments on that.
(Lab)
Did I understand the Minister to say in response to my noble
friend that basically, it is nothing
to do with the Government—“We can’t do anything; it’s up to
someone else to sort it out”? That seems to be an increasing
characteristic of the Government in certain key areas of policy.
If people are demonstrably being ripped off, which is the clear
implication of the Question, is it that the Government cannot
intervene or that as a matter of principle they will not
intervene?
(Con)
There are several elements to that. It is for the market to
determine the provision but, if that market is not functioning,
it is for the regulator to take action; if it is not functioning
properly, that is what we expect the regulator to do. I pointed
to one example where the regulator acted in needing to signpost
consumers to alternative providers if the insurer it had
approached could not provide reasonable cover. The role of the
Government is to look at policy; that is where the Financial
Inclusion Policy Forum comes in—we work with the market and the
regulator to ensure that we get the right outcomes.
(Con)
My noble friend should surely be concerned about this level of
age discrimination, which applies not only in this field but
particularly in that of car hire. I understand that some good
drivers over the age of 70 are being denied the opportunity to
hire a car, the reason given being a failure to obtain insurance.
Is this not unacceptable, bearing in mind the statistics on the
safe driving of older drivers?
(Con)
Age can be a risk factor in the provision of insurance. It is
right for the market to take that into account but, where there
are examples of discrimination that go beyond assessment of the
risk factor, that is for the FCA to consider as the regulator of
the market.
(Lab)
The Government rely on the regulator, but is not the problem that
many regulators do not do the job, be it water, insurance or many
other areas? What are the Government doing to monitor the
performance of regulators and, when they fail, to remove and
replace them?
(Con)
I think I have explained one action that the regulator has
already taken in respect of this question, on the signposting
agreement that came into place in April last year. The FCA has
also acted on general insurance pricing practices, where it was
found that existing customers renewing their insurance were being
charged unfair rates so that insurers could offer new deals to
people who were prepared to move. As I said, the FCA has taken
action on that front. Since 1 January 2022, new rules have been
in place. As I also said, the Government have the Financial
Inclusion Policy Forum, bringing together market operators and
the regulator to look at questions of financial inclusion and see
what we can do. The Government publish an annual report on the
action taken within that forum.
(Con)
My Lords, I am conscious that my noble friend finds herself in a
difficult position—it is usually for the regular and the industry
itself to behave appropriately. Have the Government asked the
regulator to make inquiries about the pricing of insurance? It is
notoriously opaque in justifying risk margins, profit margins and
the ways pricing structures are determined. It sometimes feels
like a free-for-all in the market.
(Con)
As I just pointed to, a quite significant reform was put in place
in January this year regarding general insurance pricing
practices. These measures are intended to improve the way that
insurance markets function and reduce harm for consumers affected
by price walking. We want to see how those reforms operate and
bed in over time, but I gave a commitment to the noble Lord,
, to communicate with the FCA
about its assessment of the market in relation to age. I will get
back to noble Lords.
(Lab)
My Lords, in life and in politics there is always a trade-off
between intensity of gaze and breadth of vision. I sense an
intensity of gaze from those of the average age in this Chamber,
who would like to see some rule by which people of the Minister’s
age could subsidise us old fogies. I understand that the law does
not say that, unfortunately, but there are two areas on which I
would like an answer. First, in order to be effective, the new
rules must have very positive promulgation, but I do not sense
that they have it. Every citizen seeking this should know about
them. Secondly, when the algorithm has just turned you down, it
is a pretty frightening situation—especially when your wife has
just spent £7,000 on a holiday trip—and at that point you feel
very vulnerable. Could the Minister go further on what mechanisms
exist, and which ones should exist, to ensure that this
marketplace is fairly pricing this important minority of
customers?
(Con)
My Lords, I believe that the way the signposting agreement is
designed ensures that, when a consumer is turned down for
insurance or is charged a significantly higher premium for the
medical element of it, the obligation is to directly signpost
them to alternative provision or a register of specialist
providers, so that every consumer who finds themselves in that
position is given an alternative pathway to find insurance. There
is a wider question about general knowledge of alternative
provision beyond that sign- posting, and I will happily take that
up with the FCA as well as in government.
(Non-Afl)
My Lords, do not certain insurance companies, such as Saga,
specialise in insurance for elderly people? Perhaps the Minister
can shed some light on that.
(Con)
Certainly, there are providers in the marketplace that will then
specialise. People should be signposted to such providers, so
that they know there is a solution out there for them.
