THE EQUALITY TRIBUNAL
EQUAL STATUS ACTS 2000-2008
DECISION DEC-S2011-008
Parties
Mr. A
(Represented by Nicholas Butler SC and Nathan Reilly BL, instructed by Purdy Fitzgerald Solicitors)
and
A Life Assurance Company
(Represented by Paul McGarry BL, instructed by KaneTuohy, Solicitors)
File Ref: ES/2007/150
Date of Issue:18th February, 2011
Decision DEC-S2011-008
Keywords:
Equal Status Acts 2000-2008 - Discrimination, section 3(1) - Disability ground, section 3(2)(g) - Reasonable Accommodation, section 4 - Disposal of goods and provision of services, section 5(1) - Specific exemptions, section 5(2)(d) - income protection insurance - diabetes mellitus.
1. Delegation under the Equal Status Act 2000 to 2008
1.1 This complaint was referred to the Director of the Equality Tribunal under the Equal Status Acts on the 5th November 2007. In accordance with her powers under section 75 of the Employment Equality Acts and under the Equal Status Acts, the Director delegated the complaint to me, James Kelly, an Equality Officer, for investigation, hearing and decision and for the exercise of other relevant functions of the Director under Part III of the Equal Status Acts on the 11th December 2008. The hearing of the case took place on the 28th May 2010 and final correspondence on the matter was received on the 2nd September 2010.
2. Dispute
2.1 This dispute concerns a complaint made by Mr. A, where he claims that he was discriminated against by the respondent, A Life Assurance Company, on the disability ground in terms of sections 3(1)(a) and 3(2)(g) and contrary to section (5)(1) of the Equal Status Acts in relation to the respondent's refusal to allow him increase the level of cover available to him under an existing income protection insurance policy.
3. Summary of the Complainant's Case
3.1 The complainant, Mr. A, a self employed professional, originally entered into a contract with the respondent on the 13th March 2000 which at the time provided him with income insurance cover in the event of his failure to work in return for a set fee which increased over the years. The level of cover was subject to a maximum of 75% of the complainant's earning subject to a maximum of €100,000 per year. There was the possibility to increase the level of cover without the need to undergo any medical assessment as per a clause in the original contract. In the latter part of 2001 the complainant was diagnosed with Diabetes Mellitus Type 2 - a non insulin dependent disease. The complainant claims that he can manage the disease by medication and diet control.
3.2 In 2007, the complainant applied to significantly increase the level of cover and on his application for the increase he disclosed that he was diagnosed with diabetes. The complainant was seeking to increase the level of cover to over €200,000 per year which worked out in the region of a weekly payment of €3,966 benefit should he become unable to work. The complainant claims that the respondent by letter dated 27th June 2007 refused to increase the cover under the policy without any specific medical evaluation of his condition. He claims that this amounted to 'a blanket refusal' of income protection cover for persons with diabetes. The complainant claims that he offered the respondent the opportunity to consult with his Medical Practitioner and Consultant Endocrinologist so that it could ascertain the affect of the condition on him, which he claims was being successfully managed without any due difficulty. The complainant claims that the respondent refused and continues to refuse to consider the medical evidence relating to his case. The complainant was able and did avail of an opportunity in July 2007 to increase the level of insurance by 30% as per a clause of the original contract, which gives him total cover in the region of between €120,000 and €130,000 per year.
3.3 The complainant, in response to the respondent's submission that he is not covered by the relevant ground under the Acts on the basis that diabetes does not constitute a disability within the meaning of the Acts, claims that Section 2 of the Acts defines "disability" to include, "the malfunction, malformation or disfigurement of a part of a person's body" (my emphasis added) and where "malfunction" is defined as "a failure to function normally". The complainant went on to define Diabetes Mellitus from various medical dictionaries, which he claims supports that the disease qualifies as a disability under the Acts. The complainant also refers to a report furnished by the respondent's Chief Medical Officer in which it describes diabetes as a disease within the meaning of these Acts. He also referred to two cases where both this Tribunal and the Labour Court, respectively, have determined that diabetes constitutes a disability within the meaning of the Employment Equality Acts. Finally, he referred to case law from the United Kingdom where diabetes was determined to be a disability.
3.4 The complainant claims that the respondent's decision not to consider his application to grant the extension to the insurance cover was exclusively due to the complainant's disability. The complainant claims that he offered the respondent the possibility to contact his medical consultants directly to allow it to determine the level of risk, as he claims that his medical consultants were satisfied with his management of the illness and therefore his health in general meant he was less of a risk and had the respondent contacted his medical team this would become apparent. However, the complainant claims that he received a letter from the respondent on the 27th June 2007 where it stated, "our Chief Medical Officer declined Mr. [A] due to his Diabetes Mellitus, which is a condition that we automatically decline for this type of cover" and then by letter of 23rd July 2007 wrote "for this type of cover [income protection insurance] any form of Diabetes Mellitus would lead to automatic exclusion on the grounds that the risks associated with the condition are too high from an insurance perspective. As a result a specific medical evaluation is unnecessary". Accordingly, the complainant claims that it is apparent that he received less favourable treatment as compared to a person without a disability or who does not share the same disability as him.
3.5 In reply to the respondent's reliance on the exceptions provided for in section 5(2)(d) of the Acts, the complainant claims that the underlying philosophy of the Acts is to allow a person be judged on his/her own merits and not discriminated on the basis of group characteristics and accordingly the exceptions of the Acts are to be narrowly construed. He argued firstly that the respondent's decision to automatically refuse cover was not effected by reference to the actuarial or statistical data at the time of the decision. He claims that this data was only relied upon ex post facto. He then states that the Acts require the actuarial or statistical data must be from a source from which it is reasonable to rely on and the mere reference to statistical evidence he claims, as is the case here, does not support the respondent's decision to refuse his request to extend the income protection insurance policy. The complainant highlighted a decision of the Equality Tribunal in the case Ross -v- Royal & Sun Alliance to support this position, where he claims that the Equality Officer stated that "what cannot be accepted is the complete refusal of a quotation based solely on a person's age". The complainant claims that this prevents the respondent from simply adopting "across the board policy", a blanket refusal to offer the complainant a quotation based on the disability alone. The complainant also referred to other cases of this Tribunal in relation to the same issue.
3.6 The complainant maintains that the respondent's justification of its decisions not to allow the top-up namely the impossibility of obtaining re-insurance and secondly the significant cost associated with it performing full underwriting of the risk itself, is untrue, as he claims it did not rely on these factors at the time of the decision to refuse his application. The complainant claims he offered the respondent a cost free medical analysis to his complete records via access to his Medical Consultants and it refused that opportunity instead it claims that it would not put the complainant at any inconvenience as it was still unlikely to offer cover.
3.7 The complainant claims that the respondent is required to prove that its actions were reasonable having regard to the data and other relevant factors as set out under section 5(2)(d)(ii). He claims that the respondent was clearly not reasonable having regard to the other relevant factor in this case, including the facts that he was an existing customer for seven years; had paid significant premiums without any claims made; and had offered at his own expense relevant medical evidence to the respondent to allow it fully assess the nature and extent of his disability and it refused to consider any of this. The complainant also maintains that it is clear that all this clearly shows that the respondent failed to provide reasonable accommodation within the meaning of Section 4(1) of the Acts.
4. Summary of the Respondent's Case
4.1 The respondent, A Life Assurance Company, provides financial services products including, inter alia, income protection insurance policies. The respondent acknowledged that this complaint arose out of its refusal to allow the complainant increase the level of cover available to the complainant under an existing income insurance policy. It claims in general the policy holder pays a monthly premium to hold the policy, and an agreed benefit amount would become payable in the event that the holder was unable to pursue his occupation for reasons due to accident or illness as per the terms of the policy. This benefit would be payable until the holder can return to work or until their retirement date.
4.2 The respondent claims that the complainant applied to increase the benefit payable under the policy to just under €4,000 per week, in or about June 2007. As part of that application the respondent claims that it did receive information from the complainant in relation to the diagnoses of Diabetes Mellitus. It claims that it declined to increase the policy and wrote to the complainant's GP to state that, "we consider this to be a high-risk type of contract and apply a more stringent underwriting policy than to that, say, of our life portfolio". It claims that the risk factors outlined in the application form - diabetes mellitus and smoking - were sufficient to allow it make the decision to refuse additional cover without putting the complainant at the additional expense of providing additional medical evidence in the unlikely event that it would offer additional cover. It claims that the combination of conditions had placed Mr. A's application in the higher risk category and even if medical evidence presented Mr. A to be in a good healthy position at that time, it still would not have an affected his risk category for the type of insurance protection required.
4.3 The respondent maintains that the complainant was not covered by the specific disability ground under the Acts. It argued that diabetes is not a disability and in support of that it referred to the Diabetes Federation of Ireland's website where it quotes "Diabetes is not a disability. People who feel they have been discriminated against should consult the Diabetes Federation of Ireland and their solicitor". It also refers to an extract from a paper for diabetes sufferers' support forum in the UK, January 2008, which it quotes "Diabetes.... has been found in previous cases to amount to a disability under the [Disability Discrimination] Acts. This does not mean, however, that this condition will always amount to a disability in every case .... Those people who manage by diet and exercise alone, may not be offered the protection of the Act...". The respondent referred to a decision by the Industrial Tribunal of Northern Ireland where it had to consider if a person of a similar condition had a disability within the meaning of the Disability Discrimination Act 1995 and found that the person did not qualify as having a disability under that legislation.
4.4 The respondent referred to a decision of an Equality Officer in O'Donoghue -v- Hibernian General Insurance, where the Equality Officer found that even if less favourable treatment was established under section 5(1) of the Acts, the exceptions set out in Section 5(2) dictate that such treatment is not discriminatory. It also referred to the decision in Ross -v- Royal Sun Alliance where it maintains that although the Equality Officer found that the respondent in this case did not take into account other factors and applied an across the board policy of refusing quotations, the Equality Officer still concluded that the decision was effected by reference to actuarial or statistical data. The respondent also wished to rely on decisions from outside of this jurisdiction which it claims had similar provisions to the Section 5(2)(d) exemptions. It claims in the Australian cases Xiros -v- Fortis Life Assurance and QBE Travel Insurance -v- Bassanelli where the Courts and Magistrate respectively upheld the need for the reliance on substantial statistical data being taken into consideration for the exclusions of an applicant from insurance policies and it considered the question of reasonableness and the need for the discrimination to be reasonable in the circumstances. Finally, in the Canadian Supreme Court decision in Zurich Insurance Co. -v- Ontario, the respondent claims that the Court said that the determination of insurance rates and benefits does not fit easily within traditional human rights concepts and it went on to state that insurance rates are based on the degree of risk associated with a class/group of people and although not all persons in the class/group share the same risk characteristics, it is wholly impractical that each insured be assessed individually.
4.5 As part of the respondent's evidence, I was furnished with a substantial book of papers, studies and statistical reports in relation to diabetes and in particular in relation to diabetes as a disability and its effects on employment. The respondent also provided me with extracts from its underwriting guidelines and the main re-insures manuals which it claims it relies on when considering applicants for insurance cover, these documents are specific measuring mechanisms for the insurance markets with particular information on specific illnesses, inter alia, diabetes and a weighting to be adapted for the various insurance policies in the market including for income protection policies.
4.6 The respondent maintains that it is a small insurance company and therefore for commercial and underwriting reason re-insurance is an essential reality for protecting it from potential risk. Also it claims that it is able to better access and use the world wide knowledge build up by larger experts in this field through the use of their manuals. It claims that policies over a maximum of €50,000 are sent for re-insurance to the larger insurers for commercial and underwriting reasons and therefore the re-insurance manuals set out the important criteria for making a decision in this regard. Accordingly, the whole application of it insurance business is based on consideration of this principle. In that respect the respondent sought to avail of the exception set out in Section 5(2)(d) of the Equal Status Acts.
5. Conclusions of the Equality Officer
5.1 In making my decision, in this case, I have taken into account all of the evidence, written and oral, made to me by the parties to the case. The Equality Officer must first consider whether the existence of a prima facie case has been established by the complainant. Section 38(A) of the Equal Status Acts, sets out the burden of proof which applies in a claim of discrimination. It requires the complainant to establish, in the first instance, facts upon which he/she can rely in asserting that prohibited conduct has occurred in relation to him/her. It is only where such a prima facie case has been established that the onus shifts to the respondent to rebut the inference of discrimination raised.
5.2 Section 3(1)(a) of the Acts provides, inter alia, that discrimination shall be taken to occur where:
" 3(1)For the purposes of this Act, discrimination shall be taken to occur -- (a) where a person is treated less favourably than another person is, has been or would be treated in a comparable situation on any of the grounds specified in subsection (2) (in this Act referred to as the ''discriminatory grounds)''
Section 3(2) provides that as between any two persons, the discriminatory grounds are, inter alia: (g) that one is a person with a disability and the other either is not or is a person with a different disability (the "disability ground")".
Section 2(1) defines ''disability'' to mean:
(a) the total or partial absence of a person's bodily or mental functions, including the absence of a part of a person's body,
(b) the presence in the body of organisms causing, or likely to cause, chronic disease or illness,
(c) the malfunction, malformation or disfigurement of a part of a person's body,
(d) a condition or malfunction which results in a person learning differently from a person without the condition or malfunction, or
(e) a condition, disease or illness which affects a person's thought processes, perception of reality, emotions or judgement or which results in disturbed behaviour;
5.3 As a preliminary issue, I now have to consider if the complainant's condition Diabetes Mellitus Type 2, qualifies him as a person with a disability under the Acts. I have read and considered the submissions from both parties in relation to the same. In particular, I have read the substantial volume of evidence presented to me in relation to the subject matter of the disease. I note that Diabetes was previously considered by the Equality Tribunal as a disability under the Employment Equality Acts 1998 -2004, which has an identical definition for Disability, in the case Finnane -v- Dunnes Stores. Accordingly, from all the evidence presented, it is clear that a disease of this nature qualifies as a disability within the meaning of Section 2(1) of the Equal Status Acts. Therefore, I am satisfied that the complainant is covered by the disability ground.
5.4 I will now consider the substantive issue for decision in this case. Firstly, I have to state that it is not contested that the complainant received a less than favourable decision in relation to his application for an extension to his income protection policy, which without doubt was a decision based on his disclosure that he was diagnosed as having Diabetes. Accordingly, I am satisfied that this amounts to less favourable treatment of the complainant, with a disability, as compared to another person without a disability or with a different disability within the meaning of Section 3(1)(a) the Acts. Accordingly, I am satisfied that the complainant has established a prima facie case of discrimination of the disability ground.
5.5 As a defence of its decision to refuse the top-up to Mr. A's income protection insurance policy, the respondent has requested that I consider the particular exemption for insurance companies under the Acts. Section 5(2)(d) of the Equal Status Acts 2000-2008 provides for certain factors to be considered in determining the provision of insurance policies, income protection polices and the like. It is clear that for the respondent to avail of the exemption of Section 5(2)(d) it must demonstrate that its treatment of the complainant is in connection with the provision of income protection cover with reference to (I) or (II) and (ii) below.
Section 5.-(1) A person shall not discriminate in disposing of goods to the public generally or a section of the public or in providing a service, whether the disposal or provision is for consideration or otherwise and whether the service provided can be availed of only by a section of the public.
(2) Subsection (1) does not apply in respect of -
(d) differences in the treatment of persons in relation to annuities, pensions, insurance policies or any other matters related to the assessment of risk where the treatment -
(i) is effected by reference to-
(I) actuarial or statistical data obtained from a source on which it is reasonable to rely, or
(II) other relevant underwriting or commercial factors,
and
(ii) is reasonable having regard to the data or other relevant factors,
Therefore in order for the respondent to demonstrate that it is covered by the exemption, it is necessary for it to show that the refusal to grant the complainant top up cover on the income protection policy was (1) effected by reference to actuarial or statistical data which was obtained from a source on which it was reasonable to rely and it is reasonable having regard to the data or other relevant factors or (2) is effected by reference to other relevant underwriting or commercial factors and it is reasonable having regard to the data or other relevant factors.
5.6 In relation to this, I am mindful of the evidence presented to me in this case. I note that Mr. A had an active income protection insurance policy in place with the respondent when he applied for the top-up. Mr. A claims that the respondent operates a "blanket refusal" for persons with his disability who request income protection insurance and that the decision in this case was made without any consideration to his particular situation and without any reference to actuarial or statistical data at the time of making the decision. Mr. A's position is that had the respondent availed of the opportunity to check with his medical records, it would note that he is very vigilant regarding his health matters and that he was in good medical condition at that time. I note that the respondent was aware of Mr. A's details as he is an existing policy holder. I note that Mr. A disclosed that he was diagnosed with Diabetes when he applied for a top-up of his policy - amounting to a substantial increase on the original policy taken out with the respondent - which, I understand depending on the terms of the policy, guarantees to pay a fixed weekly benefit during periods of illness or disability up to retirement age. I note that he was 44 years old at the time of the request for a top-up to the existing policy. I note that the respondent claims that for commercial and underwriting reasons it reinsures large policies to off set risk.
5.7 I must assess whether Mr. A's application was considered in light of the suite of actuarial or statistical data available and to consider whether it was reasonable for the respondent to rely on this data in the circumstances of the present case, in arriving at the decision it arrived at. I note that the Equality Officer in the Ross decision stated that,
".... It is clear that reliable actuarial and statistical data is essential to the insurance industry in conducting risk assessment and I note that the data provided by the respondents,.........does indicate that higher claims costs are more likely to arise from accidents involving elderly drivers than those involving middle aged drivers. On this basis, I consider that there is a case to be made for a company quoting proportionately higher premiums to older drivers based on the results of their actuarial reviews...".
5.8 The respondent has furnished me with an extensive compilation of medical and statistical reports relating to the effect of Diabetes on the person in the work place. It is obvious from reading all the reports and from the extensive research carried out in this area that a person with diabetes has a substantially higher chance of needing time off work due to the condition and is in turn a higher risk to an Insurance company for the particular insurance cover sought, i.e. income protection insurance. The reports submitted were not disputed as being inaccurate, misleading or false. The complainant claims that the respondent did not rely on this information at the time of making its decision on his application. The respondent claims that it relies on its internal and external expert manuals, which contain information on various medical conditions and acts as a mechanism for calculating premiums based on the factors prescribed. I am satisfied the re-insurance manuals provided the respondent with the mechanism for the calculation of the risk associated with the type of contract under consideration in this case. I am satisfied that the combination of the re-insurance manuals and the respondents own internal manual provide the respondent with the necessary guidance to make decisions of a commercial and underwriting nature which are of substantial importance to it. It is evident to me that a number of factors are inherently contained in an application of such a nature, including the size of the policy and the level of insurance protection required and consequently whether there is a commercial and underwriting need to re-insure based on the respondent policy, not to mind the consideration given to the medical factors and the weighting to be applied accordingly.
5.9 I am satisfied that it is necessary to pay particular attention to the steps taken by the respondent once the application for a top-up was received. I note that because Mr. A was an existing policy holder, the respondent was aware of Mr. A's details. It is clear that Mr. A highlighted the fact that he had been diagnosed with a medical condition which added to the risk associated with the policy. Mr. A's application for a top-up had changed the terms of the income protection insurance contract considerably, in relation to the terms of the premiums payable per month and amounts to be paid out should a claim be made. Mr. A maintains that at this stage the respondent made a decision without any reference to actuarial or statistical data obtained from a source on which it is reasonable to rely. The respondent has stated that on the contrary it checked Mr. A's details and considered the various factors pertaining. I note that the respondent relied on various manuals including its own internal manual to assist in the measurement of risk associated with each medical condition. As previously mentioned the manuals contain information on medical conditions and suggest a loading to be placed on the application accordingly. The respondent says that it relied on this mechanism in determining the correct premium that should be offered to particular customers and to offset risk. I note that the complainant deems that the respondent's consideration of his application for a top-up of his income protection policy to be wholly inadequate. However, I am satisfied that the respondent gave consideration to a number of factors before it made its decision to refuse Mr. A's application. These factors included the type of insurance product sought (income insurance protection) and the overall level of cover sought (circa. €200,000 per year). I am satisfied that having assessed the aforementioned factors, the respondent would then be in a position to decide whether it can underwrite the insurance policy itself or seek to reinsure it. I am satisfied that because the level of cover sought meant it looked to reinsure, due to its underwriting and commercial policy and therefore, the reinsurance manuals are relies on. Having consulted these manuals I note that specific loading is added for different categories, these include, again the type of insurance policy sought, a basic rating on diagnosis of illness, the duration since diagnosis, and a list of other complication factors, e.g. smoker/non-smoker, which are weighted individually. I find that the decision made was based on these measurements and is relative to the potential future risk to the insurer. I note that the mechanism used to determine Mr. A's application for a top-up of his income protection policy determined Mr. A to be a high risk for underwriting purposes for re-insurance and accordingly refused Mr. A the possibility of topping up his existing policy for commercial and underwriting reasons.
5.10 I am satisfied that the respondent having considered the factors relating to Mr. A's application and having consulted the mechanism available to it placed his application in a high risk category for the type of insurance policy he was wishing to top-up. It is clear from the respondent's evidence that Mr. A's application had a weighting too high for it to consider acceding to his top-up request and even the offer to review his medical records to date would not effect that position. I note the decision in the Ross -v- Royal Sun Alliance, where the Equality Officer found that the refusal of the respondent to grant a quotation was solely based on the complainant's age, whereas in the case before me for consideration, I am satisfied that other factors, and not only the complainants disability, were taken into consideration before a decision was made about his application to top-up his insurance cover. Accordingly, I am not of the view that the respondent failed to carry out an assessment of Mr. A's application or that there was a general blanket refusal of Mr. A's application. I am satisfied that it is reasonable that the respondent should draw on actuarial data from a source that allows it to assess applications for insurance and that it is reasonable for it to take commercial and underwriting factors into consideration.
5.11 Therefore, I am satisfied that on the balance of probabilities, in the light of all of the evidence presented in this particular case that the decision not to grant Mr. A the top-up to his existing income protection insurance policy was effected by reference to actuarial or statistical data obtained from a source on which it is reasonable to rely. I am also satisfied that the respondent's decision was effected relevant to underwriting and commercial factors, and is reasonable having regard to the data or other relevant factors. Accordingly, I find that the respondent is entitled to rely upon the exemption that is provided for under Section 5(2) of the Acts in the circumstances of the present case.
6. Decision
6.1 In accordance with Section 25(4) of the Equal Status Acts, 2000 to 2008, I conclude this investigation and issue the following decision.
6.2 I find that the complainant has establish a prima facie case of discrimination on the disability ground in terms of Sections 3(1)(c), 3(2)(g) and 4 of those Acts.
6.3 I find that the respondent has successfully rebutted the allegation of discrimination in the present case as it is covered by the exemption provided for under Section 5(2)(d) of the Acts.
6.4 Accordingly, I find in favour of the respondent in this case.
______________________
James Kelly
Equality Officer
18th February, 2011