Protection is a basic requirement, regardless of where someone is born or raised. Peter Carvill tackles the delicate subject of immigration and why insurers should not shy away from covering foreign-born people
London, the hub of the UK, is one of the world's most culturally and ethnically diverse cities. Over the centuries, scores of races and creeds - including the Irish, Chinese and Dutch - have settled in or come through London as they crossed the rest of the country. Even now, spread through the city, are diaspora that have come together and formed communities in London's enclaves. In the West End, just five minutes walk from the COVER offices, is London's Chinatown, which, despite an earlier one on Duke Street in Liverpool, is the UK's most prominent Chinese community.
Despite the undisputed cultural benefits borne to the UK through immigration, the subject is a delicate one that is often tossed around at election time and used as a punch bag by right-wing press.
Immigration to the UK has sky-rocketed over the past four decades. Between 1971 and 2001, the UK Government figures show the percentage of the UK's population born abroad increased from 4.55% to 7.53%, which is a growth in 30 years from roughly 2.4 million to 4.3 million. In terms of population shift by decade, the greatest growth in the number of foreign-born people living in the UK was between 1991 and 2001 when it increased by 36.4% compared with 15.07% for 1971-81 and 14.62% for 1981-91. This contrasts with the rise in the UK's population which remained fairly steady at 1.89% to 4.03% during this time.
How this is reflected in the insurance industry is unknown, according to Peter Staddon, technical services director at Biba, who sees the situation as representative of how protection policies are currently sold in the UK: "It is very difficult to put a figure on this because we don't put a figure on nationality. It flows from indebtedness."
Fear of discrimination, according to Staddon, is another reason why questions about nationality are not asked: "If you capture information that isn't relevant to the risk, you have to go through a process of proving you're not using that information to underwrite."
If putting an exact figure on how many immigrants are taking out insurance policies is impossible, it is easier to outline a major industry headache in this area - paperwork. In particular, the impossibility of trying to collate a full medical history when the client's records may be locked away in a filing cabinet and written in a different language on a far-away continent.
"Everything from overseas - and that's driving licenses, convictions, medical records - is difficult to get. It's hard in the UK so you haven't a hope in hell of getting it from abroad. We all know the problems of trying to do background checks on people in positions such as working with children. It's bad enough in the UK: abroad, it's a big, big problem," continues Staddon.
Roger Edwards, product director at Bright Grey, adds: "I couldn't say what the situation is but you are going to have a harder time getting hold of medical records from the past. You can't just rely on the questions - it's likely you're going to want a medical assessment because there's no point in a General Practitioner's Report."
For IFAs dealing with foreign-born clients, the process of matching policy to potential policyholder becomes more fraught than usual. Not only is it dictated by industry rules, it is morally right and imperative for advisers to seek out the best value for clients and the most appropriate cover package. And key to that is communication - the ability to understand the needs of the client, to explain the benefits and drawbacks of individual policies in full and to demonstrate the limits of State assistance.
Roy McLoughlin, senior partner at MasterAdviser, is faced with this challenge everyday: "One question is how to explain how products work since different clients are used to different country's rules and the relevant health or welfare state equivalent. You do have to explain to certain people what they'll get on the NHS."
Language is also an issue and this is an area where the industry falls behind as Edwards says no companies currently produce their literature in any other language apart from English for fear that a mistranslation may render the information less than clear, misinforming the consumer. "The basic thing," he proffers, "is whether we write the policy in a different language - some people have suggested we should be doing that. I'm not aware anyone has looked into investing in that yet but it's absolutely the right thing to think about given the number of people settling into the UK."
However, Edwards believes the development of expatriate neighbourhoods will be accompanied by a proliferation of IFA firms specialising in advice aimed at these sectors. These companies will be able to fully exploit the business potential of these niche clients.
The main objective for IFAs though, says Staddon, should be the best interests of their clients: "I think they should be aware of the circumstances around the client. I don't care if people come from Eastern Europe, Australia or Mars - products have to be sold correctly. They need to make sure they know all the relevant facts and provide the insured with all the relevant information to make the best decision."
Edwards makes the point that it is instructive to look at whether a foreign-born client wishes to stay in the UK, or return home within a year or two: "You've got to distinguish between people who are here full-time and those for a job for six months. You would question whether those without a permanent address or UK residency would want the cover."
If the latter is the case, some products will be less suitable than others. For those in the UK on a short-term basis, say less than two years, Edwards thinks term assurance would be the most appropriate policy, especially if it is taken out for the duration of that time.
Edwards sees no reason though why policies for UK-born citizens should be differently suited to those born abroad who choose to stay long-term or even settle permanently in this country. If someone is settled here, their debts and therefore their need for protection will be the same as anyone else's.
It was reported in The Independent in February that many immigrants - Polish, in particular - are beginning to return home, leading to a decrease in the UK's foreign-born population. The reasons for this include the weakening pound against some currencies, improving economies back home and a scarcity of jobs in this country. So does the insurance industry have something to offer migrants who come here for the short-term to return home within a couple of years? The answer is yes; any debt, no matter the circumstances around it, needs to be protected. Or, in Staddon's words: "Everything has insurability to it. Even the moon buggy was insured."
He adds: "There's no reason why people on short-term contracts should not take out insurance. Everybody who has indebtedness has some sort of insurability."
But, in conclusion, IFAs should be looking at the needs of the client and should resist making snap judgements about potential liabilities or difficulties with foreign-born consumers. Edwards says: "You're in danger of assuming there are differences because of where people come from. The basic requirement for protection is the same whatever your background or country of origin so any adviser should be able to give that level of advice. The actual basic protection needs are pretty much the same."
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