If insurance companies are prohibited from using age as a measure of determining risk, it is expected that insurance premiums will soar, according to a trade organization.
Yesterday, the Association of British Insurers (ABI) said that the government was planning to ban discrimination on the basis of age in providing goods and services, and that the move was likely to lead to fewer choices in insurance cover and higher premiums – with the cost travel insurance possibly doubling.
The government’s plan is part of the Equalities Bill, which is likely to be brought before parliament in the spring. Currently, insurers consider age along with other criteria, including gender, in setting premiums on products such as travel and motor insurance.
According to industry figures, the average cost of a travel insurance claim made by a person over 65 years of age is three and a half times greater than a claim made by someone under the age of 50. ABI has said that prohibiting the use of age in establishing premiums would increase costs for insurers and higher premiums for all customers. The organization went on to say that some insurers might stop offering some products altogether.
ABI’s general insurance and health director, Nick Starling, said: “Any legislation should tackle genuine discrimination, not insurance where the use of age helps to ensure a wide range of products at competitive prices.”
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