Nick Starling says older people should have access to insurance cover and not be discriminated against
Youth, as Oscar Wilde said, is wasted on the young. Whether that is right may depend on your age, but what is undeniably true is that today the UK's older population is more active than ever.
With increasing spending power, Britain's older customers are becoming an increasingly important consumer market.
For insurers this represents both opportunities and challenges. While increasingly seizing the opportunities, we need to do more to meet the insurance needs of the 'live-longer generation'.
People aged 65 –75 holiday abroad at least as often as those half their age. The number of people in their 70s who drive is growing fast: from 4 million now to 10 million by 2050.
Not surprisingly older customers expect insurance to be widely available to them. Insurers are largely meeting this demand.
For example, the average age limit for accepting new customers for motor insurance has risen to 82, compared to 74 a decade ago. Two thirds of travel insurance policies now cater for people over 65.
But we cannot avoid the stark truth that health and mobility declines with age. In regard to motor and travel insurance the older you are the more you are likely to claim, and for higher amounts.
Drivers over 70 are nearly three-quarters more likely to be killed or seriously injured in an accident than 60 –69 year olds. Customers over 65 are three times more likely to make a travel insurance claim than those aged half their age.
Despite these underwriting challenges, there is a growing market of specialist insurers with the necessary expertise to provide cover for older customers.
ABI research shows that four out of five older travellers have no problem in arranging travel insurance. However, everything is not working as it should. Many older customers feel that the industry discriminates against anyone reaching 65.
This perception may not be the reality, but views like: "They refused me a quote because of my age and made me feel a freak" is one comment from a recent Age Concern/Help the Aged report. This showed that many older customers felt that the cards were stacked against them when it came to getting motor and travel insurance.
Declining to quote, however justified commercially, can be construed as a blanket denial of cover throughout the market, if not handled sensitively.
We see the challenge as how can we help the minority of older customers who face problems to more easily shop around to get the cover they need. We need a system to 'signpost' the routes to obtaining motor and travel insurance.
The ABI has set up a task force to consider how we can develop such a system. Chaired by Keith Morris, chairman of Sabre, the specialist motor insurer, the taskforce will include insurers, Biba, Age Concern, Help the Aged, and Citizens Advice. It aims to develop a system whereby if an insurer cannot provide cover to an older customer, it can direct him to alternative insurers or brokers who can quote terms.
Government also has a role to play. We need a review of the medical licensing process to make it easier for insurers to identify safer older drivers, and reflect this in premiums.
And we must resist calls from some lobby groups for legislation. Standardising policies and removing age limits would raise the costs for all, including older customers, and threaten the existence of the specialist insurers of older people.
The insurance industry is responding competitively and innovatively to the challenge of insuring older customers.
Insurance is all about enabling people to live fuller, more active lives.
We are now working hard to make sure that insurance helps older customers live their lives to the full. IT
Nick Starling is director of general insurance at the ABI