Vulnerable Customers: Access at a price

How businesses treat vulnerable customers has been the subject of concentrated focus by the Financial Conduct Authority and insurance trade bodies over the past 12 months. So, how accessible are insurance products specifically for people with disabilities?

As one of the vulnerabilities underlined in the Association of British Insurers and British Insurance Brokers’ Association code of good practice for vulnerable customers, firms looking to sign up to the code should now be considering how accessible their products and services are for customers with disabilities.

According to the FCA, 16% of working-age adults in the UK have a disability, with estimates the total UK disabled population is more than 11 million. A more than 10-year-old Department of Work and Pensions figure – that has not since been updated – put the spending power of disabled people in the UK at approximately £80bn, which disability action groups have previously cited to emphasise to the business sector that the disabled community should not be forgotten.

However, according to a June 2015 report published by an Extra Costs Commission set up by disability charity Scope, many of the disabled people involved in focus groups for the research considered insurance was so expensive it was unaffordable.

Scope said its research showed there are 2.5 million disabled people who feel they pay too much for insurance and at least half a million people unable to get insurance who attribute this to their disability.

Despite these statistics, most insurers contacted by Post were emphatic that, when it comes to pricing, disabled customers are not treated any differently to the non-disabled clients.

Natural disadvantage
Allianz operations director Stephanie Smith identifies the 2012 Paralympics – held in London – as a catalyst for society, including those within the insurance industry, understanding the breadth of disabilities people live with.

She considers insurers have not “consciously” priced disabled customers out of the market.

“When I joined this company [in 2009], we started asking general questions about disabled people and why they might struggle. One of the things that came to light was that some of the standard policies we have, for example, costings around modified cars, naturally disadvantage people who have mobility impairments,” Smith explains.

“It is a law of unintended consequences because you make a rule thinking about your average customer and inadvertently disadvantage disabled customers by accident. For example, providing the cheapest products online or only through digital channels makes it very tough for people who are partially sighted or cannot use websites.”

The ABI’s general insurance director James Dalton explains that, often, there is a disparity between what a customer is willing to pay for insurance and what they can afford.

“Often people say they are priced out of the market because of insurance but that is often not the case. Insurance is about pricing risk. I don’t think a disabled consumer is priced out of insurance; they are posing a different type of risk that is being priced by the insurer,” Dalton says.

Modifications to vehicles and homes are two examples, given by Dalton, of why insurance for disabled customers is priced the way it is – repairs and replacements for modified items will lead to potentially higher value claims.

Rob Gibbs, director of RSA Motability, a partnership between RSA and the Motability charity, affirms: “Our perspective is that we would treat a disabled customer as we would any customer in terms of pricing and risk factors. There are a number of factors that build up the premium such as geographic location, vehicle type, and age.”

RSA Motability offers a level of cover that is broader than fully comprehensive, Gibbs explains, adding that the more than 20-year partnership between the insurer and the charity means RSA has a good understanding of the specific needs of its customers.

LV underwriting director Guy Lawrence explains a similar pricing philosophy is in place at his company whereby the policy price is not increased due to a customer’s car being modified to accommodate their disability.

Regardless of industry assurances, in its report, Scope called for the FCA to investigate if disabled people, and similar under-served groups, have access to insurance that accurately reflects risk. Smith and Gibbs both expressed their support for such a probe.

“We know what stimulates FCA intervention – feedback from customers who do not feel they are being supported. The challenge is that while there is a large disabled community whether they would get a strong enough voice,” Smith says.

Gibbs explains the external measuring processes RSA undertakes to ensure it practises risk-reflective pricing: “We work with both the charity and Motability operations because they look at regular benchmarking of premiums and we look to support them in finding comparable data or premiums against coverage in comparison to the service and coverage we provide.”

“If there are concerns around detriment to vulnerable customers then that could be an area, but we see no differentiation in our customers.”

Making adaptations
While pricing may not differentiate for customers with disabilities, commentators said there were some adaptations insurers could make to their processes to enable disabled customers to better access insurance products.

In November, for example, Allianz was the first insurer to launch a video relay service for deaf people using British Sign Language. The service is available for prospective customers, as well as direct home and motor customers, pet and Home & Legacy customers for both policy queries and claims.

Smith says launching the video service felt like the right move for Allianz. “We thought it was a useful way for our hard of hearing and deaf customers to get in touch with us. It was a good fit with our values and to align with our partners,” she explains.

Allianz has decided it will not go down a fully digital or email-only route for its communication with customers because it would disadvantage elderly people or customers who are partially sighted.

“We have made a clear statement that we will provide the right media for our customers to access our services. We are also working with the Royal National Institute of Blind People to make sure we are building our websites properly, so people with screen-reader technology can get the page dictated for them,” Smith says.

RSA Motability is currently investigating how webchat could be used with disabled customers as a way of increasing access to insurance products. “The change from the disability living allowance – the personal independence payment – has seen a change in the nature of disabilities on the scheme and, therefore, not all of our customers would feel comfortable interacting over the phone as we have in the past,” Gibbs explains.

Recruitment processes were also highlighted as being important for facilitating good communication with disabled customers.

Gibbs says Motability takes real care in selecting its staff. “I call it professional empathy. We have a recruitment policy where my senior team screens everyone joining the business because our service is really important to us.”

“Offering a way to find a solution to continuous mobility and empathy in very difficult situations where a customer is very reliant on their vehicle – we need to ensure that is something we see in all of our people,” he explains.

Smith adds: “Even with the best processes in the world, if your people don’t understand them and are not culturally on board, they will not happen. We are putting a lot of store in engagement and training for our frontline staff so they understand exactly what is needed, why it is important and what might be a cry for help.”

The insurer also supports its staff by providing tools such as special earphones or desk facilities.

Trouble products
Commentators admitted that some insurance products remain difficult to buy for customers with disabilities with travel insurance most commonly cited as a “trouble product”.

Lawrence explains: “This is because existing medical conditions often increase the likelihood of a medical emergency occurring while travelling and may increase the cost of treatment or require returning someone to the UK, for example, if they have specialist needs.”

Smith also suggested travel insurance could be more difficult from the perspective that once you have had undergone a medical procedure the cost of the policy can be prohibitive. “Insurers are much better at recognising that cars can be modified and homes can be modified – generally speaking they are no inhibitor to the insurance you have,” she says.

Peter Hayman, director at PJ Hayman & Company, contends a customer with a physical disability should have no difficulty obtaining travel insurance unless there is an underlying chronic condition or other health issue.

“We would expect the premium to be the same for somebody physically disabled as anyone else,” Hayman adds.

“If a disabled person does have medical issues then travel insurers will typically require them to go through some form of medical screening that will determine whether or not the risk is either acceptable or requires additional terms by way of higher premiums or excesses,” he says. “Disability in this respect is typically not relevant. Rather, the underlying condition is what will determine the risk.”

Collective buying groups were cited by Scope as one business model that could help disabled customer identify products that might be placed on a mainstream price comparison website.

Bought By Many, specifically, was highlighted as a signposting service disabled customers could benefit from. Partnerships head David Woodfield told Post insurance buying groups could be used to help disabled customers by linking them with insurers that can cater for their needs rather than leaving them to navigate the market alone.

“Once part of a buying group, disabled customers would have a better platform from which to voice their needs to the insurance market and lay out their requirements that are not met. They could improve the design of products, pricing and underwriting methodology and the accessibility of the buying process. All of this is more difficult when customers are dispersed and don’t have a joint voice,” Woodfield said.

Continuing improvement
Insurers can experience similar benefits of buying groups. Woodfield explains that when customers are dispersed, it is hard for insurers to advertise relevant products and clearly understand the demands of a customer segment.

“Bringing demand into homogenous groups allows insurers to get more efficient access to customers and get a clearer picture of their needs. Beyond this, there are also benefits for the insurer in that the risk within a group is more homogenous than it is across the open market, giving them greater certainty when managing their risk position,” he says.

As the insurance industry faces greater regulatory oversight and trade body action on their treatment of vulnerable customers it is fair to assume access to insurance for customers with disabilities can only continue to improve.

As Gibbs concludes: “It should be no different to any other book of business. I see a customer base that really values their vehicle and [having] a vehicle and mobility is not an option it is a necessity for many of our customers.”