Insurance makes the news for all the wrong reasons, as a national newspaper accuses insurers of “cherry-picking” customers

The Guardian has blasted insurers for misunderstanding the nature of mental health problems and refusing life and travel insurance to applicants, including a 7/7 victim.

In an article published on Friday, the national claims that dozens of would-be customers had got in touch with it after being refused cover, or being quoted huge premiums, for a variety of mental health problems.

These ranged from “long-distant episodes of depression or anxiety”, to having previous occurrences of self-harm on their medical records.

According to The Guardian’s sources, some people had seen their premiums rocket after attending grief counselling following the death of a family member. After suffering post-traumatic stress disorder, one victim of the 7/7 London bombings said that they have found themselves penalised.

Reportedly, charities and campaigners described the findings as “very worrying”, while the paper accused insurers of “cherry-picking” customers to “boost the bottom line” and “minimise risk”.

Brokering a solution

However, the article does not suggest that any of the people who had seen premiums increase or been denied cover as a result of mental health problems in their medical history had contacted brokers.

Aston Lark chief executive Peter Blanc thinks it is unfortunate that more people are not aware that brokers can help in this situation.He commented: ”Direct insurers say to somebody: ‘Sorry, we can’t look after people because they don’t fit our criteria. They (customers) then write into the Daily Mail’. Actually, if they spoke to a broker, the broker would find a solution for them.”

Blanc continued: “That’s not to criticise direct insurers. Insurers can choose which risks they take on and which risks they don’t take on. You can’t say to an insurance company ’you have to take on this risk’ if it’s outside their appetite. But a broker’s job is to find the insurer and match the need with the solution. And I think that unfortunately, we don’t get  that message out there enough.”

He added: ”Phoning up an insurance company that doesn’t do one particular type of business and making the newsworthy, it’s just nuts. When they could phone up a broker and they say, yes, I’ve got a solution for that, I’ve got three or four different underwriters that could provide the answer. That’s not really newsworthy, is it? You can’t exactly see that headline: ‘Client gets a good solution from an insurance broker’”

Going viral

The Guardian launched its call for stories on the back of a petition entitled ‘Stop travel insurance companies discrimination against mental health conditions’. It was launched by someone with bipolar disorder, who claimed that Bupa had refused them travel insurance.

The petition reached 50,000 signatures within a week last October. 58,000 users have now signed it.

The accusations come at a time when insurance is already suffering from a poor public image, as the discount rate and IPT, among other factors, have led premiums to rise for many.