Do insurers discriminate against older Australians?
By their very nature most insurance products are discriminatory. If you are a higher risk you tend to pay more which may be fair enough, but does it work the other way around?
One of the largest insurers, Suncorp told an inquiry into the issue: ‘….It is critical for the insurance industry to be able to lawfully discriminate during the underwriting process
It’s often claimed older people, despite being less likely to claim by smashing cars and wrecking homes, are somehow unfairly stung with higher premiums.
Age Discrimination Commissioner Susan Ryan says she hears many stories from older Australians unable to find or afford suitable insurance products.
A constant vexation has been about travel insurance and how declaring a pre-existing medical condition can also up the price to insure your luggage.
Others complaints have been around comprehensive car insurance and how premiums can suddenly go through the roof for no apparent reason bar the policy holder’s age.
In truth it’s hard to tell. There are many different kinds of insurance to cover our lives, homes, goods and chattels, cars, and travel and many different insurers with hard to compare offerings.
While most are owned by just two big brands, IAG and Suncorp, all are highly protective of the data they use to determine what kind of peril you pose to their purse.
It’s this lack of transparency that makes it hard to compare different policies to determine their value and suitability short of spending some time and effort online or on the phone.
The one important exception is private health insurance which is highly regulated and has a community rating system. This means the premiums are the same regardless of your age, health, risk factors etc .
There’s also a government website which compares all the offerings and explains the system in ways you’ll never find for less regulated car or household insurance.
In the UK insurers have agreed to aggregate data to show how age is used when assessing risk and coming up the prices for both travel and car insurance.
Veteran British actor Sheila Hancock, who’d been driving for 63 years found last year her annual premium jacked up more than three times to almost $5000!
Interestingly the Association of British Insurers data for 2014 shows:
- People aged between 18 and 20 were almost twice as likely to make a claim compared to 71-75 year olds
- Drivers aged between 86 and 90 were less likely to make a claim compared to 66-70 year olds, but the average claim was more than 50% higher for the older group.
There’s no such requirement for the release of such data in Australia yet. Obviously there is an effect with age but what is meant by discriminating ‘lawfully’ as the insurers claim they must?
The Age Discrimination Act allows insurers to discriminate on the grounds of age if it’s based on reliable statistical data or if there’s no such data is considered ‘reasonable’ relevant to other factors.
In short we rely on the regulators to ensure older Australians are not taken for a ride when it comes to insurance although it’s arguable they do benefit by NOT paying any extra for private health insurance than a 20 year-old.
The best advice is to use every tool you can to make sure you are getting the right cover and a good price whatever the insurance type.
There’s no getting away it will take work and time but the savings can be substantial. Stay tuned as we’re going to be looking more closely at what you can do to get more out of your insurances for hopefully less time, worry and money.
