The Government continue to work closely with insurers and the independent regulator to ensure that everyone has access to suitable and affordable insurance. The Financial Conduct Authority requires firms offering retail travel insurance to signpost consumers to a directory of specialist providers if they are declined cover, offered cover with an exclusion or charged a significantly higher premium for the medical coverage element.
My Lords, in March 2020 there was an outburst of gross discrimination against people on age grounds that nearly locked people in their own dwellings because they had reached the age of 70. Perhaps the Minister can go back to the Association of British Insurers, which produced a review in 2018, and point out that many of its members are raising exponentially the fees required for cover for people over 70, 75 and 80. Given that only 7% of over-65s claim in any given year, surely it is possible for us to ensure that people who are living longer, fitter and able to travel can do so and have the cover necessary to make that possible.
My Lords, travel insurance is fundamentally designed to cover medical expenses, where age can be a risk factor. The Government do not intend to intervene in commercial decisions made by insurers, as this could damage competition in the market. The new rules that I referred to in my Answer came into place in April 2021—after the example the noble Lord gave. They mean that firms need to signpost consumers to a directory of specialist providers if the medical premium they are being charged is significantly higher than normal. The Government continue to want to promote financial inclusion, and have the Financial Inclusion Policy Forum in place to ensure that they consider all questions around financial inclusion.
My Lords, people with serious pre-existing medical conditions often find it difficult to get travel insurance. As the Minister has said, in April last year the FCA introduced new signposting rules to make it easier. Can the Minister reassure the House that insurance companies and brokers are currently complying with the signposting rules and that this signposting is as prominent as it should be?
Did I understand the Minister to say in response to my noble friend Lord Blunkett that basically, it is nothing to do with the Government—“We can’t do anything; it’s up to someone else to sort it out”? That seems to be an increasing characteristic of the Government in certain key areas of policy. If people are demonstrably being ripped off, which is the clear implication of the Question, is it that the Government cannot intervene or that as a matter of principle they will not intervene?
There are several elements to that. It is for the market to determine the provision but, if that market is not functioning, it is for the regulator to take action; if it is not functioning properly, that is what we expect the regulator to do. I pointed to one example where the regulator acted in needing to signpost consumers to alternative providers if the insurer it had approached could not provide reasonable cover. The role of the Government is to look at policy; that is where the Financial Inclusion Policy Forum comes in—we work with the market and the regulator to ensure that we get the right outcomes.
My noble friend should surely be concerned about this level of age discrimination, which applies not only in this field but particularly in that of car hire. I understand that some good drivers over the age of 70 are being denied the opportunity to hire a car, the reason given being a failure to obtain insurance. Is this not unacceptable, bearing in mind the statistics on the safe driving of older drivers?
Age can be a risk factor in the provision of insurance. It is right for the market to take that into account but, where there are examples of discrimination that go beyond assessment of the risk factor, that is for the FCA to consider as the regulator of the market.
The Government rely on the regulator, but is not the problem that many regulators do not do the job, be it water, insurance or many other areas? What are the Government doing to monitor the performance of regulators and, when they fail, to remove and replace them?
I think I have explained one action that the regulator has already taken in respect of this question, on the signposting agreement that came into place in April last year. The FCA has also acted on general insurance pricing practices, where it was found that existing customers renewing their insurance were being charged unfair rates so that insurers could offer new deals to people who were prepared to move. As I said, the FCA has taken action on that front. Since 1 January 2022, new rules have been in place. As I also said, the Government have the Financial Inclusion Policy Forum, bringing together market operators and the regulator to look at questions of financial inclusion and see what we can do. The Government publish an annual report on the action taken within that forum.
My Lords, I am conscious that my noble friend finds herself in a difficult position—it is usually for the regular and the industry itself to behave appropriately. Have the Government asked the regulator to make inquiries about the pricing of insurance? It is notoriously opaque in justifying risk margins, profit margins and the ways pricing structures are determined. It sometimes feels like a free-for-all in the market.
As I just pointed to, a quite significant reform was put in place in January this year regarding general insurance pricing practices. These measures are intended to improve the way that insurance markets function and reduce harm for consumers affected by price walking. We want to see how those reforms operate and bed in over time, but I gave a commitment to the noble Lord, Lord Sharkey, to communicate with the FCA about its assessment of the market in relation to age. I will get back to noble Lords.
My Lords, in life and in politics there is always a trade-off between intensity of gaze and breadth of vision. I sense an intensity of gaze from those of the average age in this Chamber, who would like to see some rule by which people of the Minister’s age could subsidise us old fogies. I understand that the law does not say that, unfortunately, but there are two areas on which I would like an answer. First, in order to be effective, the new rules must have very positive promulgation, but I do not sense that they have it. Every citizen seeking this should know about them. Secondly, when the algorithm has just turned you down, it is a pretty frightening situation—especially when your wife has just spent £7,000 on a holiday trip—and at that point you feel very vulnerable. Could the Minister go further on what mechanisms exist, and which ones should exist, to ensure that this marketplace is fairly pricing this important minority of customers?
My Lords, I believe that the way the signposting agreement is designed ensures that, when a consumer is turned down for insurance or is charged a significantly higher premium for the medical element of it, the obligation is to directly signpost them to alternative provision or a register of specialist providers, so that every consumer who finds themselves in that position is given an alternative pathway to find insurance. There is a wider question about general knowledge of alternative provision beyond that sign- posting, and I will happily take that up with the FCA as well as in government.