BIBA response to the UK consultation on the European Commission Proposal for an Equal Treatment Directive

29th July 2009

The British Insurance Brokers’ Association (BIBA) is the UK’s leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers.
BIBA membership includes 1700 regulated firms. Insurance brokers and intermediaries distribute nearly two-thirds of all UK general insurance. In 2007, insurance brokers and intermediaries generated £1.5 billion of invisible earnings and they introduce £22 billion of premium income into London’s insurance market each year.
BIBA is the voice of the industry, advising members, the regulators, the Government, consumer bodies and other stakeholders on key insurance issues.  BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards. BIBA works closely with the Chartered Insurance Institute to provide training to those working in the industry and actively participates in helping the industry and its customers deal with some of the major issues of the day.

BIBA members provide professional advice to businesses and consumers, playing a key role in identification, measurement, management, control and transfer of risk.  They negotiate appropriate insurance protection tailored to individual needs and operate to a very high standard of customer service with the aim of ensuring peace of mind, security, financial protection and the professional advice required.

Our members are able to offer access and availability to fairly priced insurance to consumers of all ages. We do not believe there is a market failure for older or younger people seeking insurance (particularly travel or motor insurance).
On the Equal Treatment Directive:

• BIBA opposes unfair age discrimination
• BIBA supports proportionate risk based pricing
• BIBA welcomes signposting

BIBA was part of the HM Treasury Financial Service Experts’ Working Group on age discrimination – a report from this group was submitted to the team drafting the Equality Bill.

Our responses to the 17 questions set out are as follows:

1. What Recent evidence do you have of harassment that would be prohibited by virtue of the Directive that would not currently be prohibited by UK discrimination law on the grounds of a) religion or belief and b) Sexual orientation?
No evidence

2. Do you support the proposal in the Directive to extend protection against harassment on the grounds of a) religion or belief and b) sexual orientation? Please explain why.
Not relevant

3. Do you have concerns about the proposal? Please explain why.

4. What different treatment on grounds of age is justifiable in the provision of services generally and financial services in particular? Please provide evidence to support your answer.
Insurance uses a risk based pricing system based on differentiation. The lower the risk, the lower the premium. There is a link between age and the frequency and severity of claims for example an 18 year old is three times more likely to claim on their motor insurance than a 50 year old and the average claim is £4,400 for an 18 year old compared to £1,459 for the ages 30-59.

Therefore discounts are given as drivers become less of a risk. We believe insurance requires a specific exemption from the equal treatment directive. This risk based policy system should be allowed to continue otherwise premiums are likely to increase across the board.

The premium should be proportionate to the risk with fair pricing, not discriminatory pricing. If an insurer does not wish to insure a risk, they should be required by legislation to “signpost” the enquiry to a provider that can assist.

5. How do you think the Directive could best reflect the intention to eliminate   unjustifiable age-based discrimination in services generally and financial services in particular?
Unintended consequences could arise if severe restrictions are placed in the pricing systems and acceptability criteria of the Insurance Industry – For example if some insurers were forced to accept an age group they had no knowledge about they may pull out of that class of business entirely.

We believed insurers should be allowed to insure or decline any risk, but should signpost declinatures to a suitable provider e.g. via the BIBA find a broker service on or telephone 0870 950 1790. This would prevent age discrimination.

There is No market failure in obtaining travel insurance. Brokers can provide fairly priced cover for traveler of all ages, one of our members having recently insured a 93 year old for a European trip without difficulty. The age banding system is also beneficial as it cross subsidises benefits across age groups and this should be allowed to continue.  
6. Given the limits of Community competence and subject to the proposals being clarified in relation to housing, as described above, can you provide examples of the practical effects of the Directive in the areas of:

• Health Care
• Education
• Housing

Not qualified to answer

7. Do you have evidence of any harmful age discrimination in the provision of     social housing.
Not qualified to answer.

8. Should the manufacture and design of products be covered by the requirements of the Directive?
Yes unless justification for exemption.

9. What difficulties could you foresee?
For insurance products lack of justifiable data in public domain is a problem (due to competition law) including Private Medical Insurance. PMI providers failing to give claims data so the industry can not easily change rate proportionality. 

10. Do you support the proposal that transport vehicles not currently covered by specific accessibility regulations should be subject to Article 4?
Yes, provided that the exception of DDA does not require vehicle amendment which would alter the physical feature of the vehicle. Flexibility for this should be included. 

11. Do you have concerns about the proposal? Please explain why.

The Proposal could be interpreted as meaning that accessibility by anticipation should apply in respect of new and existing premises.
No Comment 

12. Do you support the proposal? Please explain why.
We support the proposal as long as any legislation does not impose disproportionate factors which would affect price or cover structure.

13. Do you have concerns about the proposal?


The proposal could be interpreted as meaning that the requirement to provide reasonable accommodation for disabled persons in a particular case should require landlords and controllers of let premises to make physical alterations to those premises. 

14. Do you support this proposal? Please explain why.
Not qualified to answer.

15. Do you have concerns about the proposals? Please explain why.
No Comment 

16. Do you think the proposed timetable is realistic?
Yes, If the European parliament takes ownership, however there must be concensus.

17. What, if any, difficulties would it cause?
Modification to listed buildings may not be possible. There are also issues with high rise buildings and lifts within them.

This could be an increased insurance liability where someone fails to interpret or implement a physical alteration to the premises.

Thank you for taking the time to consider our response. If you have any further queries please contact Graeme Trudgill, BIBA’s Technical and Corporate Affairs Executive for further information on 02073970218 or on [email protected] or Steve Foulsham, BIBA’s Technical Services Manager on 02073970234 or [email protected] or Peter Staddon, Head of Technical Services on 0207 397 0204 or [email protected]

Yours sincerely

Eric Galbraith
Chief Executive

Direct Tel:  020 7397 0201
Direct Fax: 020 7626 9676
[email protected]