UK travel insurer Avanti goes behind the headlines to address some key issues with regards to signposting
The Avanti team read with great interest a recent ITIJ story, ‘Silver skiers take more risks’, which reported on a study from the Association of British Travel Agents (ABTA) into purchasing habits of winter sports insurance cover. The headline finding, that the over-55s are the age group least likely to make sure they have appropriate cover before heading off on a skiing holiday, struck us as surprising at first. Older travellers are not known for a lack of caution. But the more we thought about it, we wondered if there was a deeper story here. What reason could there possibly be to explain why someone aged 55 or over from the UK is almost three times more likely than someone aged 18 to 24 not to check they have the right travel insurance?
We believe it could be down to how we handle the thorny issue of age discrimination in insurance. Here’s why …
Mitigating age risks
As everyone in UK insurance knows, the financial services industry has a special exemption from age discrimination laws. The Equality Act, which came into force in 2012, made it illegal in this country to refuse products or services to adults, or to alter terms and conditions, based on age.
The insurance industry was granted an exemption for obvious reasons. As insurers, our entire business model is based on mitigating risk. As people get older, the risks of ill health, accidents and, yes, death increase, along with the amount of insurance claims made. To allow the industry to continue to adjust for these increased risks, the UK Government granted an exception to its new age equality laws. But on one condition: that, if an insurance provider felt it was unable to offer a policy on the basis of age, it would have to take reasonable steps to help the individual concerned find alternative cover. The industry agreed that if an older customer was not sold a policy, they would be referred to the British Insurance Brokers’ Association (BIBA), who would then match them to a provider who could accommodate their needs.
This voluntary ‘signposting’ arrangement applies to all types of insurance – travel, car, home, health, life and so on. Because it maintains the industry’s exemption from the Equality Act, it also allows insurers to apply premiums to any policy they sell to an older customer.
Five years on, I wonder how much signposting goes on. I have not seen figures for travel insurance, but one shocking report from Age UK found that 85 per cent of people aged over 80 who were refused car insurance were not being referred to BIBA.
This sort of thing makes buying insurance highly stressful for older people. As specialists in single and annual trip travel insurance for the over-50s, we hear from customers all the time how confusing and frustrating they find it. Some are outright angry when they are quoted sky-high prices on the basis of their age, or are refused a policy entirely.
In this context, the fact that four in 10 older travellers admit to not checking the terms and conditions of a policy starts to become understandable. They probably just feel relieved to get any kind of cover.
Most people do not mind paying a little more for their travel insurance because of their age. They understand the reasons. But what they do expect is good service. This is something the industry could improve when dealing with older customers. Signposting should be an integral part of customer service best practice, not just based on age, but to ensure every person gets appropriate cover for the type of trip they go on.