By Rachel Williams The Association of British Insurers (ABI) is set to launch a guide to the ...
By Rachel Williams
The Association of British Insurers (ABI) is set to launch a guide to the Disability Discrimination Act that will help life and disability insurers comply with the act before it is fully enforced in 2004.
In 1996, the Government accepted that there were situations where insurers were justified in offering the disabled less favourable terms. But, there is still scope for this section of the population to be discriminated against.
The guide, which is at consultation stage, aims to ensure best practice across the industry to ensure disabled individuals are treated fairly when applying for cover. It addresses claims, compliance, customer services, product development and underwriting to ensure disabled individuals get treated fairly when they apply for cover.
It details the main provisions of the Act and sets out principles for insurers to consider and implement. It is hoped a consistent approach across the industry is reached while encouraging insurers to do more for disabled people.
Nick Kirwan, chairman of the ABI critical illness working party, said the guide would clarify the way insurers handle disabled applicants. He said: "When disabled people try and get cover for products covering disability such as income protection, critical illness and other PTD benefits, certain issues do arise." This is often because a disabled applicant may be perceived as a poor risk.
Kirwan added: "Under the DDA insurers are not allowed to offer worse terms be that higher premiums or less cover through exclusions unless they have reliable data that can back up the decision. They are not allowed to use any preconceptions or stereotypes."
Where terms offered are likely to be worse than a non-disabled applicant, insurers must pay close attention to the severity of the terms imposed. This will ensure disabled customers get the best deal available to them.
Kirwan said: "It is better to charge more for premiums than to exclude, and it is better to exclude conditions than to decline applications."
Guidelines are set to ensure that where exclusions are imposed they are not too tight. "Take a CI policy with PTD benefits, for example. If the applicant had a back problem an insurer may remove the PTD benefit. But the applicant holds no higher risk of having a car accident than other applicants so it is unfair to exclude this. It would be better to exclude PTD arising from back problems," he added.
It is estimated that 10% of people in the UK meet the definitions of disability laid down by the DDA.
