New regulations could double travel cover costs

Policy premiums could rise sharply if insurers are prohibited from using age as a measure of risk.

Travel Insurance News - 05/03/2009

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Earlier this week, the Association of British Insurers (ABI) reported that the UK government was planning to prohibit age discrimination in the providing of goods and services, and that the move could lead to fewer choices in insurance policies and higher premiums. The group went on to say that the cost of travel cover could double.

The plan is part of the Equalities Bill, which is expected to be considered by parliament in the spring. Currently, insurance providers use age as a criterion along with gender to established prices for their products – including travel and motor insurance.

A travel insurance claim made by a policyholder aged 65 or older costs, on average, three and a half times more that is made by a person under 50 years of age, according to ABI figures. ABI said that banning age as a criterion in setting policy rates would increase risk costs for insurers and raise premiums for all customers. The association added that some insurers would likely stop offering some types of insurance.

Nick Starling, the general insurance and health director for the ABI, said: "Any legislation should tackle genuine discrimination, not insurance where the use of age helps to ensure a wide range of products at competitive prices."

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