Complainant

Respondent

Parties

John  Wolfe

Allianz Insurance

Representatives

  N/A

Anthony Layng, McEneaney Tighe Solicitors

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 21 Equal Status Act, 2000

CA-00033479-001

06/12/2019

In October 2019, the Complainant contacted the Respondent to renew his travel insurance. He stated that the Respondent refused to offer him insurance cover in respect of a number of pre-existing conditions. He also asserted that his premium increased significantly because of his age and alleged that this is discriminatory.

There was a substantial amount of documentation submitted by the Complainant including multiple and comprehensive submissions post the first hearing. It is not practical to outline these in detail and I have highlighted the key points below.

The Complainant stated that he applied to the Respondent for a travel insurance policy in respect of a cruise holiday he was due to begin and was told to go for screening. The Complainant alleged that the screening exercise left a lot to be desired and highlighted that the questions fell far short of assessing his actual current general health. Specifically, he stated that the transcript of the screening phone call showed that at no time was he asked about the pre-existing conditions that he reported, namely blood pressure, cholesterol or a small aneurysm. He also claimed that he was not asked when he first become aware of these conditions, what level of medication he was on or whether he had attended outpatients, a hospital or his GP for any of these conditions in recent years.  

In relation to the aneurysm, he stated that his medical consultant had asserted that the aneurysm was very small and was unlikely to need an intervention in the future. He also alleged that he was not asked for any medical information from his doctor or consultant as part of the screening process despite this being required by the Respondent’s terms and conditions in their health declaration.   

He also stated that his two other conditions, blood pressure and cholesterol, are 14 years old, are stable and that he never in that time had to attend any outpatient department or hospital for them. He also asserted that these two conditions are no longer pre-existing according to the Respondent’s own criteria. 

He claimed what when he was informed by the Respondent that he was not covered for his pre-existing conditions, he was shocked and asked if he could pay extra to cover these but was told that he couldn’t. He asserted that this clearly breaches the Respondent’s terms and conditions in their health declaration wherein it is stipulated that an extra premium can be paid for these conditions. 

Specifically, it states: 

“Based on the medical information you provide we will confirm cover can be offered for your declared medical condition (or conditions) and if an extra premium needs to be paid. If an extra premium is required cover will not start until this has been paid in full and we have issued written confirmation”.

He also stated that he emailed the Chief Customer Officer of the Respondent on a number of occasions for an explanation but that he did not reply.

In addition, he asserted that the Respondent is vicariously liable for the actions of the person who carried out the screening process given that the Respondent insisted on him going to screening. 

As well as not covering him for his pre-existing conditions, the Complainant also asserted that he was discriminated against in relation to the premium that he was charged for the policy and stated that it represented an increase of 646% over a similar trip that he had taken in 2017. He claimed that the reason for the increase was that he was now in the 81-99 age category. He further asserted that a travel insurance premium should be based on his current and past health record and not solely on a wide age band. He also highlighted that he has never made a claim on any travel insurance policy despite many travels over the years.  In addition, he added that, when he complained, the Respondent could have asked him to provide a health report from my GP at his own expense and could have reconsidered the premium based on that report but refused to do so.

He stated that he relies on a hypothetical comparator in circumstances where the Respondent accepts that it applies age banding in calculating premiums. He stated that he is his own comparator in that he availed of the same service at a significantly lower price in a previous year.

He added that his wife is also a comparator as he was treated less favourably than her, given that she paid 30% less for her premium than he did.  

There was a substantial amount of documentation submitted on behalf of the Respondent including multiple and comprehensive submissions post the first hearing. It is not practical to outline these in detail and I have highlighted the key points below.

In summary, it was asserted by the Respondent that advancing age carries a higher risk of illness or accident.  This assertion, which was supported by considerable analysis and research provided by the Respondent, means that an older person is more likely to make a claim against an insurance company than someone of a younger age and that the older a person gets, the higher the likelihood of a claim and the cost of such a claim.

Given the higher risk involved in insuring an older than a younger person, the premium payable for an older person will therefore inevitably be greater as it was in the instant case.

In evaluating the evidence before me, I must firstly consider

(i) whether the complaint is properly before me and

(ii) if the Complainant has established a prima facie case pursuant to S. 38A of the Acts. This requires the Complainant to set out, in the first instance, facts upon which he can rely on in asserting that prohibited conduct has occurred in relation to him. 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.

In relation to (i), I find that this complaint is properly before the WRC and has been brought within the requisite time-limits provided by Section 21 of the Acts, including those for giving notice of a complaint and referring the complaint.

In relation to (ii) there are three specific criteria which need to be met to show that a prima facie case has been established, namely:

1. Membership of a discriminatory ground (e.g. the age ground) 2. Evidence of specific treatment by the Respondent 3. Evidence that the treatment received by the Complainant was less favourable than the treatment someone, not covered by that ground, would have received in similar circumstances.

If and when all three of these criteria are met, a prima facie case has been established and the burden of proof shifts to the Respondent, meaning that the difference in treatment is assumed to be discriminatory on the relevant ground. In such cases the Complainant does not need to prove that there is a link between the difference and membership of the ground, rather the Respondent must show that there is not.

With regard to 1 and 2 above, and in relation to the allegation that he was discriminated against because the Respondent refused to cover him because of his pre-existing conditions, I note that the Act states that:

“prohibited conduct” means discrimination against, …. a person in contravention of this Act;

“discrimination shall be taken to occur where—

 (a) where a person is treated less favourably than another person is, has been or would be treated in a comparable situation (in this Act referred to as the ‘discriminatory grounds’) which—

(i) exists,

(ii) existed but no longer exists,

(iii) may exist in the future, or

(iv) is imputed to the person concerned,

(b) where a person who is associated with another person—

(i) is treated, by virtue of that association, less favourably than a person who is not so associated is, has been or would be treated in a comparable situation, and

(ii) similar treatment of that other person on any of the discriminatory grounds would, by virtue of paragraph ( a), constitute discrimination,

or

(c) where an apparently neutral provision would put a person  referred to in any paragraph of section 3(2)at a particular disadvantage compared with other persons, unless the provision is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.

(2) As between any two persons, the discriminatory grounds (and the descriptions of those grounds for the purposes of this Act) are:

( a) that one is male and the other is female (the “gender ground”),

( b) that they are of different  civil status  (the “ civil status  ground”),

( c) that one has family status and the other does not or that one has a different family status from the other (the “family status ground”),

( d) that they are of different sexual orientation (the “sexual orientation ground”),

( e) that one has a different religious belief from the other, or that one has a religious belief and the other has not (the “religion ground”),

( f) subject to subsection (3), that they are of different ages (the “age ground”),

( 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”),

( h) that they are of different race, colour, nationality or ethnic or national origins (the “ground of race”),

( i) that one is a member of the Traveller community and the other is not (the “Traveller community ground”),

Given that there was no evidence provided by the Complainant in relation to what discriminatory ground, in accordance with 1 above, the Respondent engaged in prohibited conduct regarding the refusal to offer him any cover in respect of his pre-existing conditions, I find that he has not established a prima facie case in respect of this aspect of his complaint.

With regard to 1 and 2 above, in relation to the allegation that he was discriminated against because of his age, the Complainant stated and the Respondent acknowledged that he was charged a higher premium than someone under 80 because he was aged between 81 and 99. The third criterion to be satisfied is the test of less favourable treatment in similar circumstances. In relation to this criterion, I must have regard to section 5 (2) (d) of the Equal Status Acts 2000-2004 which provides for certain factors to be considered in determining the provision insurance policies or pensions.

If, therefore, the Respondent can show that his treatment of the Complainant in connection with the provision of insurance cover was effected with 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 is reasonable having regard to the data or other relevant factors, then section 5.1 of the Acts will not apply and the Complainant will have failed to establish a prima facie case of discrimination.

In order to fall within the Section 5(2)(d) exemption, I consider that the Respondent must demonstrate that either test (i) or test (ii) above is fully satisfied.

Given that the Respondent highlighted in its submissions that the analyses, information techniques and methodologies used by them in the calculation of their premiums are highly confidential and commercially sensitive, I decided to proceed with test (ii) above in the first instance.

In relation to this test, the Respondent’s Chief Underwriting Officer stated that, in the past, the traditional approach to pricing was through “burning cost analysis” in which the premium is based on the average past loss experience, suitably adjusted to reflect changed loss costs and exposures. It was asserted however that this did not recognise the conditions of the market, when in reality, the pricing of a premium requires knowledge of what the competition is doing and awareness of the position of the market.

I also note that the Respondent referred to the ABI statistics in the UK which show that the claims frequency and the cost of claims are all higher for older people than for younger people. Reference is also made by the Respondent to the research of Robert Thoyts for his book “Insurance Theory and Practice” which showed that the risk of exposure for companies to a higher incidence of insurance claims and higher quantum of each individual claim, is strongly correlated with getting older, especially after 65 years of age. The Respondent also referred to research highlighted in publicpolicy.ie which stated that the cost of claims in the private health insurance market is rising steeply for the over 80 age group, specifically a 5.8% increase in claims between 2014 and 2015 as well as a 24% increase in the value of claims between 2013 and 2015. It was also stated, that although in relativity terms, those over 80 years, such as the Complainant in the instant case, account for only 2.8% of the overall population, they are responsible for 14% of the total claim costs. While I note that this research referred only to private health care claims, I find that it is reasonable to suggest, as the Respondent did, that travel insurance claims also mirror this experience.

Having posited that both the frequency and cost of claims are more expensive for older than younger people, the Respondent highlighted that there were only three options available to a travel insurance provider and underwriter when dealing with a proposer/potential customer of advanced years.

1.      Place a blanket refusal on proposals for insurance cover of persons above a certain age

2.      Charge a flat rate premium to all persons regardless of age

3.      Use the weighted/equitable premium approach

The Respondent asserted that a blanket refusal of proposals from older customers would likely constitute “prohibited conduct” based on a reading of the decision of the Equality Officer in the matter of Jim Ross vs Royal and Sun Alliance (DEC S2003 – 116). The Respondent also highlighted that charging a flat rate premium, regardless of age, to all of its customers is not commercially realistic or viable, given that this would lead to the retention of higher risks and the deterring of better quality risks resulting in a top heavy portfolio imbalanced with poor to bad underwriting risks which could not be funded by the premium income received.

It was also asserted by the Respondent that its competitors in the sector do not either offer travel insurance for those over 80 or charge more for their older customers in the same way that the Respondent does. Given the unwillingness by the Respondent to use option 1 for legal reasons or option 2 for commercial reasons, it chose to use option 3, namely the weighted/equitable premium approach. This is where the premium charged accurately reflects the risk proposed, so that those customers who present with higher risks are charged higher premiums and those who present with lower risks are charged lower premiums. The Respondent highlighted that this approach is consistent with insurance theory and practice because it enables the retention of a balanced portfolio of risks. It was also asserted that it accords with the Solvency II model in which insurance underwriters are required rigorously and prudently to assess risk as presented in order to avoid and safeguard against the underwriting risk.

Having been presented by the Respondent with the options available to travel insurance underwriters, I note that no evidence was provided by the Complainant to suggest that it would be commercially viable to offer flat rate premiums regardless of age. I also find that it is not reasonable or practicable for the Respondent to be expected to medically assess each of its applicants for health insurance and apply a different premium for each one or even ask its customers to pay for their own medical checks, as the Complainant suggests, especially when the weight of uncontradicted evidence presented by the Respondent clearly shows that the cost of claims increases when customers gets older.  

I have therefore concluded that, on the balance of probabilities, in the light of all of the evidence presented to me, that the difference in the quotes provided to the Complainant was effected by reference to –

(ii) other relevant underwriting or commercial factors, And (iii) is reasonable having regard to the data or other relevant factors and is in accordance with Section 5(2) (d) of the Equal Status Acts 2000-2004.

Accordingly, I find that the Complainant has not established a prima facie case of discrimination.

Given that the Complainant has not established a prima facie case of discrimination, I find that the Respondent did not engage in prohibited conduct in relation to him.

Insurance risk; age;