Jeff PrestridgeMar 20 2019

Make insurance affordable

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Make insurance affordable
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A pipe dream? Maybe. Grandiose words, you may think, but it is an objective we – all those connected to the financial services industry – should all strive towards, whether we are insurers, financial advisers, planners or mere financial commentators.

That means insurance for the young, keen to get behind the steering wheel of a car for the first time, through to cover for the elderly, keen to travel the world while their health is in good nick. Financial comfort blankets for those moments in life when things go awry.

Yet despite some smart initiatives in the motor market with young drivers (such as telematics) and the protection sector (cheap and cheerful cover from mainstream banks), the insurance industry is increasingly becoming more exclusive than inclusive. More inaccessible than accessible.

Given the elderly will form a bigger proportion of the population in the years ahead – and have good money to spend – is it right that the insurance industry deems swathes of them almost uninsurable?

I see it every day of my working life. Last week, for example, I received a lovely letter from a couple in their dotage – their words, not mine.

For a long time, they have enjoyed their trips abroad by land and sea, but they believe that the cost of travel insurance is now in danger of curtailing their adventures. A two-month trip to Cyprus later this year has resulted in an additional travel insurance bill of £1,800.

Although they understand that insurers take a risk with elderly people like themselves, it irks them that every time they have travelled, they have returned to Blighty having “not claimed for even a cut finger”.

They ask: “Why is it not feasible for the insurance companies to refund a slice of the premiums paid for not claiming?” Why not indeed.

Through price, they are being excluded from cover. Access to insurance is being denied.

Given the elderly will form a bigger proportion of the population in the years ahead – and have good money to spend – is it right that the insurance industry deems swathes of them almost uninsurable?

Of course not.

I also see it in my personal life: My mother is as hard as nails, even more so since Dad died almost two years ago. A strong, proud, independent individual who just gets on with life.

But, like all of us, she likes the reassurance that some insurance cover brings, in particular her home cover policy with British Gas.

A policy that means if there are problems with the heating or plumbing, she knows someone will come out and fix the problem.

Yet, British Gas just tried to jack up her premiums by 20 per cent – an extra £100 a year. A price increase Mum could not really afford.

Of course, Mum is made of stern stuff and did not just lie down and accept the price increase. She rang British Gas and gave some poor soul an earful.  

After a short break – presumably to get his ear seen to – she was given a new premium lower than the one she had been paying.

Brilliant, but it should not be this way. Loyal customers should not be exploited.

Nor should they be priced out of the market. Rather, they should be embraced and rewarded for their loyalty.

Access to insurance remains a big issue in the financial protection market. As a result of the loading of premiums, cover remains unaffordable for many.

Last week, I had the joy of meeting Johnny Timpson who heads up the Access to Insurance Working Group, an organisation set up to look at ways of making protection insurance more inclusive and universal. A laudable group set up with good intention.

During our conversation over a flat white or two, he came up with some interesting statistics. No: frightening, shocking figures.

Of the 44,000 advisers going about their daily business selling mortgages, pensions and enhancing people’s wealth, Mr Timpson says only 4,000 currently offer financial protection advice. A paltry number, given the growing customer need for cover.

When talking about the loading of premiums, he said too much of it was “robotic”.

For example, he could not understand why women suffering from post-natal depression were penalised with 25 per cent premium loadings if they bought financial protection cover – premium ratings that they would pay for the rest of their policy’s life irrespective of whether the depression had long gone away.

Mr Timpson – appointed last year as disability champion for the insurance industry by Sarah Newton, minister for disabled people, health and work (until she resigned last week over Brexit) – is determined that access to protection insurance is improved as a matter of urgency.

The group he chairs is looking at a variety of ways this can be achieved – for example through greater signposting, enabling consumers to be pointed in the right direction.

I trust Mr Timpson and his colleagues in the Access to Insurance Working Group make good progress. Insurance for all.

That is where we need to get to. Some 44,000 advisers, all protection insurance specialists. And an end to the practice that results in 500,000 people every year either getting rated or only offered restricted cover.

Jeff Prestridge is personal finance editor of the Mail on Sunday