As an ex-offender, trouble getting cover led Chris Stacey to join a charity that persuades insurers to offer policies to people like him. He tells Saxon East about the untapped business firms are missing out on and the disclosure minefield that’s holding both sides back
In the eyes of the law, Chris Stacey has served his suspended sentence for theft and converting criminal property. But in the world of insurance that sentence rumbles on. The 23-year-old, who committed the crimes four years ago as a law student, must declare his convictions on insurance applications for another seven years and pay a ramped-up premium. That’s if he’s lucky enough to get a policy.
Stacey is one of some 8 million ex-offenders in the UK who struggle with the Byzantine rules and requirements insurers place on them. He and charity Unlock, the National Association of Reformed Offenders, argue that insurers are missing out on a huge pool of business.
The ABI agrees. It has teamed up with Unlock to lobby government to simplify the process for ex-offenders. The issue is already on ministers’ agenda: home secretary Jacqui Smith recently commissioned a report on inclusion for underprivileged groups in financial services.
Meeting Insurance Times last month at Unlock’s small upstairs office in the tranquil village of Snodland, Kent, Stacey outlines the problem. ‘‘There’s no information given about what you need to sort out once you have a criminal record; no such thing as that. It’s very tough for people,” he says. “I don’t have contents insurance. Not through the fact that I can’t get it, but the price means I can’t afford it.”
Stacey’s experiences led him to work for Unlock, which, along with the ABI, hopes to clarify the need for disclosure on ex-offenders’ insurance applications and to bring an increase in the number of insurers offering them cover.
“Some consumers are confused about exactly what they’re required to disclose, and we’re happy to work with Unlock to see what more insurers can do,” ABI assistant director of markets and regulation Kate Carr says. “There’s also a role for people who come into contact with offenders to make sure they highlight the significance of their conviction for themselves and their family.”
Unlock has fought hard to compile a list of brokers that will place insurance for ex-offenders. It used to work with only one broker but can now call upon 17 and has just secured one of the biggest names, Towergate.
Even so, Unlock staff say there’s still a long way to go in integrating ex-offenders into insurance. The disclosure issue is particularly complex. The level of difficulty ex-offenders face in getting cover depends on the type of insurance. Home and contents and public liability are some of the most difficult areas to secure cover.
Chris Bath, Unlock’s director of projects, says: “Insurers will ask if you have a conviction and often refuse cover without looking into individual circumstances – whether the conviction was for pissing in the street, fraud or arson.”
Damned if you don’t
While many ex-offenders resort to only disclosing convictions when asked, many insurers believe details of convictions should be revealed regardless, under principles of utmost good faith. They may refuse claims if people fail to disclose convictions without being asked.
Unlock says the message from insurers on travel and motor insurance is confused. As an experiment, the organisation wrote to 17 car insurers asking what policies they offer people with non-motoring convictions. Direct Line and Churchill said they don’t ask and don’t need to know. But when Unlock said the applicant had been convicted of a serious crime, Direct Line wrote back and said that although they didn’t ask, they still needed to know. When Insurance Times contacted the firm, an official said company policy was not to ask about non-motoring convictions because it “does not affect premium”.
Bath says this confusion is not uncommon, but he feels there’s a simple solution: all insurers should ask for previous convictions regardless.
“Buying insurance as if it’s a bag of sugar could lead [customers] into serious, serious trouble. We’ve said to people that if declaring your conviction means paying more, what you’re buying is an insurance policy instead of a useless piece of paper. What’s the point of paying £50 when it’s not worth the paper it’s written on?”
There are also concerns that confusion regarding disclosure is spilling over into interpretation of the Rehabilitation of Offenders Act 1974 (ROA), which aims to help reintegrate ex-offenders into society. It defines a rehabilitation period after which a conviction is spent – or effectively ignored. People who have been fined by the courts – for dropping litter, say, or urinating in the street – have to declare the penalty for five years. For anyone who has served a prison sentence for longer than six months, it’s 10 years.
Unlock says insurers all too often take spent convictions into account. Stacey adds: “If they become in possession of a spent conviction, they should disregard it.”
Bath puts it in harsher terms. “Every time [insurers] take account of a spent conviction, they are breaching statute; they are the offenders.”
It’s no wonder that Unlock is lobbying the government to reform the ROA to reduce the rehabilitation periods – especially as a six-month sentence given today might be for a less serious crime. It hopes a private member’s bill can be scheduled in parliament over the next year.
The ABI agrees that the authorities could do more to educate offenders about the ROA. “The Home Office’s 2002 report, Breaking the Circle, found the act to be out of date and ineffective,” Carr says. The ABI has no evidence of insurers leveraging spent convictions, however. What’s more, there is no obligation to declare them.
While the government has stood still on the issue of rehabilitation, it is encouraging to see evidence of the insurance world moving with the times.
Broker Allen & Allen places insurance with convicted drivers, and chief executive Tony Allen says it can offer “good, profitable business”.
“We try to look at things and get behind the facts. We want to find out if someone has been unlucky or if they are a real offender,” he says. “There’s quite a difference between somebody who goes with a view to stealing cars and someone who’s had a bust-up in the family and takes his sister’s car without permission, and then the sister reports him because she’s frightened something’s going to happen. Those are the people who end up with a smaller conviction and it’s up to us to get behind what’s going on.”
Underwriters should stop worrying about high claims and take up the pen for ex-offenders, Stacey says. “There is this perception that people with convictions are more likely to make a claim. I haven’t seen that evidence and I don’t know who has. The evidence from insurance brokers on our list is that this group of people have the lowest claim ratio against other client groups.”
If Chris Stacey speaks for the 8 million people who share his circumstances, perhaps it’s time the industry listened to him. IT