LGBT Cover: Over the rainbow


Pride in London Parade takes place on Saturday 25 June and this year's theme is #nofilter, encouraging lesbian, gay, bisexual and transgender people to stop self-censoring and live their life as they are. To insure these customers as they are, do insurers need to offer rainbow covers?

Emerald Life launched in March with the first UK products designed specifically for the LGBT community, starting with home, term life, wedding and pet covers, to be followed by travel. Policies include legal expenses cover for service provider discrimination, among other things.

This new offering raises many questions. Have insurers been neglecting LGBT people to the point of unwittingly discriminating against them? Can an insurance provider thrive by catering to just one social group? And by tailoring products to the needs of a certain section of society, could the insurer be accused of discrimination themselves?

Heidi McCormack, CEO of Emerald Life, is keen to stress that while the fledgling business' insurance products have been designed with the LGBT community in mind, anyone can take out the services. "We have to make sure that, while we are LGBT-facing, we have to take in everyone."

With chairman Steve Wardlaw, she researched the LGBT market for more than two years. "There is an extensive body of research that shows that the needs of these customers are being unfulfilled," she says.

"We looked at the top 10 wedding and home insurers. None provided any cover against discrimination if, for example, a couple reserved a wedding venue but then they were refused access to the venue. And six out of the top 10 travel insurers have HIV exclusion in their coverage."

McCormack says many people with the virus have to pay extra for coverage, irrespective of their current condition, whereas Emerald Life's travel insurance takes their viral load into account.

She believes many policies have not been updated since the 1980s, when the AIDS epidemic broke out. She adds underwriters view the fashion and entertainment industries, in which many members of the LGBT community work, as declining sectors when it came to home insurance.

"It is digging into a lot of these things to understand the nitty gritty," she says.

In the first seven weeks Emerald's website received 57,000 visits, with a lot of the traffic coming from social media. "We have to give it a few more weeks to see how it is working," McCormack says, although she is already talking about expanding into other areas. "We have kick-started with general insurance but we will be branching out. We are absolutely looking at areas that are synergetic in terms of financial services."

UK General Group has underwritten a number of Emerald Life's personal lines products and taken on some of the regulatory responsibilities. Director of personal lines Charles Coburn says it is a good fit: "We are a niche provider and a forward-thinking provider."

He trusts others will follow suit. "It's just a case of the mainstream insurers not being up to speed with certain sections of customers. There has been a lot more focus on LGBT in the last six to 12 months. There will be other products coming on to the market."

Inadvertent discrimination
Theresa Farrenson, IT partner at Aon and founder of Link-LGBT Insurance Network, says some insurers may have inadvertently discriminated against the LGBT community. This may be through micro inequities, or because old systems can't cope with same-sex marriages, or because call centre staff tend to assume all customers are heterosexuals. "Most of it would be about poor experience at the end of the phone," she says.

She predicts members of the LGBT community will be "at least going to have a look" at products aimed at them and might even be willing to pay higher premiums if they feel the insurer understands their requirements. "Most LGBT people will put their money in an LGBT-friendly organisation."

She believes there will be a push to create new products for transgender people, as well as new ways of providing insurance to the LGBT community. "There are lots of recognisable gains and lots of opportunities but Emerald Life is more a realignment and focus.

"All you need to show is two men holding hands in a brochure. It is these sorts of things that resonate. I welcome the change and will be interested to see how the industry responds to the challenge."

Other insurers remain cautious. Sheila's Wheels was offering cheaper car insurance premiums to female drivers until the European Court of Justice ruled in 2011 that gender-based pricing breaches Europena Union's equality rules.

The legal view

Helga Breen, partner and head of employment London at DWF
Under the Equality Act 2010, service providers must not discriminate against a person because of a protected characteristic – which includes a person's sexual orientation, marriage, civil partnership or gender reassignment.

For insurance, discrimination can be in terms of access to the products or the terms of the products, such as premiums and insurance benefits. It can arise directly - when people with a protected characteristic are excluded - or indirectly - when an insurance company applies a provision or criterion that puts people with a protected characteristic at a disadvantage.

It is unlawful, for example, for an insurer to charge higher premiums to LGBT people, provide them with lower benefits or refuse them insurance cover altogether.

It is open to insurers to take positive action if they reasonably think that people sharing a certain protected characteristic suffer a disadvantage or have different needs. Insurers will need to show that the action is a proportionate means of enabling those people to overcome or minimise their disadvantage or meeting their needs.

This could include, for example, targeting the LGBT community through selective advertising, changing the wording of insurance application forms so that they are gender and marital status neutral or training call centre staff to deal sensitively and non-intrusively with callers.

However, positive action is not the same as positive discrimination. Treating someone with a protected characteristic more favourably is generally unlawful discrimination other than in the context of service users with a disability. This means that, while insurers can lawfully target the LGBT community in advertising and marketing, they cannot suggest that they will not provide services to non-LGBTs or refuse to provide them with the same insurance services and products at the same prices as they offer to LGBTs.

In response to European Court of Justice decision in the Test-Achats case in 2011, the Equality Act 2010 was amended. Since 21 December 2012 insurance providers can no longer use gender to determine premiums paid or benefits granted.

Many mainstream insurers consider separate products aren't necessary. Aviva's group brand director Jan Gooding, who is also chair of LGBT campaign group Stonewall, says the insurer provides mass market products that are suitable for the LGBT community.

"To fully understand what LGBT consumers want from insurance products, we commissioned research with the community to find out if there is a need for specific products and services," she says. "When asked whether insurance products meet their needs, the majority of respondents (52%) were neutral to this and a further 37% agreed that our products do meet their needs.

"The research suggests that there is no great desire, or need, for specific LGBT products, but insurers have to make sure the customer experience they provide for LGBT consumers is appropriate at all times.

"We continue to make sure that we communicate and price our products in a way that doesn't discriminate or make assumptions about sexual orientation or gender identity. It is important to provide a customer experience that shows the products are relevant to the LGBT community. The products themselves don't need to be specialist. Equality means our LGBT customers receive the same cover as straight customers, but the customer experience needs to be inclusive for everyone."

More to do
Aviva, however, does recognise that there is more to do on representing its diverse customer base through marketing materials, Gooding says. "That is something we are looking to action as soon as possible."

A spokesman for AIG says the insurer believes that members of the LGBT community should not be treated differently than the overall population, with a similar set of questions at the point of quote.

"When determining whether we can offer cover, we ask about a person's health, lifestyle and travel activity, but we do not consider a person's sexuality to be a risk factor when we make those assessments.

"Occupation is also important. Influencing factors include the duties they fulfil and conditions they work under, such as carrying and lifting, working at heights, working with hazardous substances and working underground."

What LGBT people think of insurance companies

79% would change the way insurance companies treat the LGBT community

39% would change call centre language so the opposite sex of partners is not presumed

35% would allow customers to register themselves and partners with appropriate gender

34% want LGBT people in ads and promotional material

23% want insurers to have the LGBT community represented throughout their organisation

22% want insurers to work to end discrimination and prejudice

17% would like to be offered cover for issues or needs specific to the LGBT community

15% think donations from insurers should support LGBT charity or education projects

Source: Research conducted by You Gov on behalf of Emerald Life among a sample of 1000 LGBT respondents

Elspeth Hackett, head of personal lines underwriting at Esure, says: "As a mainstream insurer, we are confident that our products provide good cover for people from all walks of life.

"We don't discriminate or make any assumptions about anyone's personal circumstances and, as insurance is based on an individual profile, there is no reason why our policies wouldn't be suitable for someone from the LGBT community."

A spokeswoman for Zurich also says it doesn't differentiate its approach for the LGBT community.

With many people being attracted to products designed especially for them, may these insurers be missing out on custom?

Farrenson describes the launch of Emerald Life as "a breath of fresh air".

"I welcome the challenge to the market," she says. "The LGBT community is thinking ‘at last someone is focusing on us'. Maybe some might even pay higher premiums, although others might think it's a grab for the pink pound.

"But does not knowing your client in a deep way improve your products and services? It may just be that other insurers will now look at their products. Maybe they should be marketing to this group?"

"I would like to think they would recognise the LBGT community is worth investing in. I would hope that the organisations would look at their products to see if they are inclusive and adjust them if they are not."


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