Equality for who exactly?

The proposals around the Equality Act raise a number of issues for the insurance industry. Insurance companies differentiate on the grounds of age because it is an accurate measure of risk, not a method of discriminating against segments of the population.

This inevitably means that older people pay more for certain lines such as travel insurance, just as young drivers pay more for motor insurance.

As the number of adverts for insurance products on TV proves, it is a very competitive market and this directly relates to the premiums certain groups pay, dependent on risk. If we did not rate premiums using this methodology it would result in more costly insurance for many. We believe insurers should be allowed to rate by risk, and let a free market take its course.

In particular, selling insurance for the elderly calls for specialised skills, since insurance companies must understand the risks involved and the particular needs of the customer. Not all insurance companies, including some of the big names, have the necessary expertise, and so it is important that older people know how to find the specialist companies that offer competitively priced products for this market.

Quite rightly, insurance companies in this country are strongly regulated and require appropriate authorisation from the Financial Services Authority for the types of products they offer. They must also demonstrate they hold sufficient capital to meet any claim that any policyholder might make. If insurance companies start selling insurance policies outside their authorised remit, the FSA will have to insist on more regulation and capital, pushing up prices for everyone.

Karl Murphy, Partner, EMB.