Complainant

Respondent

Parties

Liam  Scott

Aviva Insurance Ireland Dac

Representatives

Ian Boland Corrigan & Corrigan Solicitors LLP

Act

Complaint/Dispute Reference No.

Date of Receipt

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

CA-00058574-001

29/08/2023

Background

A complaint was received by the WRC on 29 August 2023.  An initial hearing on 7 May 2024 was adjourned.  A second hearing took place on 4 October 2024.  Both hearings were “in person” hearings.

The Complainant provided a detailed written submission.

The Complainant contends that he is denied the use of an Open Driving Option included in the terms of his brother-in-law's insurance policy. The Complainant contends that as he has the policy holder’s permission, he, as a member of the public, is entitled to the service, but that service is being denied to him because of his age.

The Complainant submits that on the 31 July 2023 he became aware that was excluded from using an Open Driving Option on his brother-in-law’s insurance based entirely on his age. The Complainant sought to clarify the issue, through correspondence, on seven occasions with the Respondent but received no details until the arrival of the Respondents submission on 28 March 2024.

The Complainant submits that the Respondent confirmed that age was the only basis on which he was excluded from using the Open Driving Option. On 29 August 2023, the Complainant wrote to the WRC stating that the Respondent always had been given time to respond to his queries and that they had been informed both of his intention to submit a formal complaint and when the formal complaint had been made. The Complainant submitted a complaint under Section 21 of the Equal Status Act, 2000, to the WRC, which was received on 29 August 2023. The Complainant submits that although his 70th birthday was on 30th July 2020, he only became aware that there was a difficulty regarding his use of his brother-in-law’s Open Driving Option on 31 July 2023, in conversation with a nephew. He wrote to the Respondent on 7 August 2023 seeking clarification on the situation. The Respondent replied by letter dated 18 August 2023, stating “The rate for open driving is set for the bandwidth of persons aged 25 to 70. However, in order to rate any driver outside that bandwidth the driver must be named on the policy to be correctly rated”

The Complainant replied by letter to Respondent on 18 August 2023, stating that the Respondent had not supplied any evidence that the exclusion was based on anything other than age, (being over 70 years of age) and that the Complainant would now refer the matter to the WRC. The Complainant’s case referred to an alleged ongoing discrimination.

The Complainant submits that Section 21 (11) of the Act covers such a situation. In this case the open driving option operated throughout the duration of the Complainant’s brother-in-law’s contract therefore a complaint could have been referred within six months of the termination of the contract and has met the requirements of the Act in terms of notifying the Respondent within the time-frame specified. 

The Complainant submits that with reference to the Open Driving Option (a) there is a difference in treatment which is based on age alone and as per a letter from the Respondent dated 18 August 2023, it is established that the specific treatment alleged by the Complainant actually occurred and applied to the Complainant.

The Complainant submits that the courts have consistently held that the principle of equal treatment requires that comparable situations must not be treated differently. The Complainant contends that he has established a prima facie case, in that a prohibited conduct has occurred to him, therefore Section 38A of the Equal Status Act now applies. This moves the burden of proof from the Complainant to the Respondent as is stated below

The Complainant maintains that the Respondent has not produced any statistical or actuarial data. In the absence of such data, it is not possible to establish “if the source is reasonable having regard to the data or whether the factors relied upon are relevant.”  The Complainant asserts that in refusing to supply the statistical and actuarial data and the underlying rating factors for independent verification, the Respondent places the Complainant at an unfair disadvantage in the litigation because of the data, the calculations and rating factors not being produced for inspection.

The Complainant would not gain any litigious advantage by seeing the requested data so it is clear that the only party to gain by not producing the data is the respondent. The Complainant asserts that he has been placed at a litigious disadvantage.

The Complainant’s submission then questions the validity of the data provided to him by the Respondent.

In summary, the Complainant maintains, that Insurance company data and results cannot be assumed to be reasonable having regard to the data or other relevant factors, and that independent verification is an essential part of the process.

The Complainant asserts that the Respondent in selecting only one rating factor ( that of age) and in ignoring all other relevant rating factors and their interactions for the purpose of excluding those over 70 from using the Open Driving Option, the Respondent has not made an appropriate assessment of risk where the treatment is effected by reference to actuarial or statistical data obtained from a source on which it is reasonable to rely.

The Complainant is 73 years old and precluded from availing of the open drive option included in his brother-in-law's insurance policy because he is that age. It is clear and not contested that the Respondent imposes a limitation on the Open Driver Option based purely on age.

The Complainant gave evidence on Affirmation at the hearing.

The Complainant stated that in the first instance he had established a prima facie case, and it is up to the Respondent to justify their actions.

The Complainant stated that he should have been provided with data by the Respondent in order to make his case in relation to the analysis of statistics.  The complainant maintained that the Respondent has relied on only one factor in its decision making and therefore they cannot rely on S5(2)(d).

In response to a question put to him in cross examination, Mr Scott stated that he was not treated the in the same way as someone under 70 years of age. The detriment being that he is treated differently.

In concluding the Complainant submits that he has been discriminated against by the Respondent contrary to Section 5(1) of the Equal Status Acts on the grounds of age by not being provided cover under the ‘Open Driving’ option of the Motor Policy. The Respondent has not reached the burden of proof.  The Complainant asserts that the Respondent relies on data which it is convenient to rely on and data on which it is reasonable to rely on. He believes other data should be utilised.

The Respondent provided a detailed written submission. Included in the submission was a 16-page document covering in detail the Statistical Model Data Set / Generalised Linear Model utilised by the Respondent in determining its policy in relation to risk levels by driver age.

The Respondent denies that the Complainant was discriminated on the grounds of age.

The Respondent accepts that it is provider of a service as defined in Sections 2(1) and Section 4(6) of the Equal Status Act.

Section 5(1) of the Equal Status Act provides that an organisation shall not discriminate against the public generally or a section of the public in providing a service, whether the disposal or provision is for consideration or otherwise.  While differential treatment of persons in the provision of services to the public is prohibited generally under Section 5(1) of the Equal Status Act, the practice of differential treatment of persons within the context of provision of insurance products is explicitly permitted under Section 5 (2)(d) of the Equal Status Act, which sets out the following:

“5 (2) Subject to subsections (4) and (4A), subjection (1) shall not apply in respect of –

(a) […] (b) […] (c) […]

(d) differences in the treatment of persons in relation to annuities, pensions, insurance policies or any other matters related to the assessment of risk (other than on the gender ground or in any other circumstances to which the Gender Goods and Services Directive is relevant) where the treatment—

(i) is effected by reference to –

(ii) actuarial or statistical data obtained from a source on which it is reasonable to rely, or

 (iii) other relevant underwriting or commercial factors and

is reasonable having regard to the data or other relevant factors,”

The Respondent submits that the setting of an age-bandwidth applicable to the optional, additional Open Driving cover does not constitute discrimination for the purposes of the Equal Status Act, and such differential treatment of persons is expressly permitted pursuant to Section 5 (2)(d) of the Act.

The Respondent is a commercial entity which provides insurance cover for certain items and events subject to various terms, conditions and underwriting criteria. Insurance is all about assessing the risk in respect of specific items or matters which insurance cover is being considered. The provision of insurance services is fundamentally a commercial business, and it has long since been accepted that insurers are permitted and entitled to assess the theoretical risks posed by different groups of people, different events or different items before deciding to offer cover or for the purpose of setting premiums, limits of cover and policy excesses.

Whilst insurance is directed to providing an indemnity to an insured in respect of a particular risk which materialises and which is covered by the insurance policy, the insurance company in providing such insurance cover is concerned to limit the risk exposure to a level that it is prepared to tolerate, relative to its own objective risk criteria and/or the level of risk. This is reflected in whether the insurer decides to offer such insurance cover and, if so, the setting of insurance premium, limits of cover and policy excesses.

Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or their property, or from liability for damage or injury caused to a third party. In order to make insurance cover commercially viable it is necessary for insurers to effectively pool clients' risks to make premiums more affordable for the customer.

It is valid and lawful for an insurer to have regard to objective factors, the detail of which may vary, in deciding whether to provide insurance cover at all and/or in deciding the level of premium to be set having regard to the insurer’s assessment of the theoretical and/or risk posed by the party seeking insurance cover or the particular type of cover being sought. So long as the justification for not offering insurance cover is not deemed to be arbitrary or frivolous, an insurer is entitled to rely on actuarial and statistical data and experience to justify not offering insurance cover or on the level of premiums to be charged to customers. An insurer which has regard to legitimate and objective risk rating factors which informs the decision to offer insurance cover and the setting of the insurance premia, is entirely legitimate and valid and cannot legally be impugned.

The Motor Choice Policy permits the Insured to obtain an optional, additional insurance cover for “open driving” which provides insurance cover to any person with a valid driving licence between the ages of 25 and 70 years old. It does not provide cover to any person who is under 25 years of age or over 70 years of age.

‘Open Driving’ cover is an optional, additional cover provided by the Respondent, which a customer may elect to purchase, should the additional cover provided fit their needs and budget.

The Respondent submits that were it to provide its ‘Open Driving’ cover without an associated age bandwidth, the Respondent would not be in a position to accurately rate each named driver that falls outside the 25–70 age bandwidth the level of sophistication which we currently employ due to the level of data gathered through requiring this (generally) higher risk cohort of customers to be assessed individually. This would result in (i) the Respondent having a lower level of understanding of its own motor insurance risk exposure; (ii) a decreased ability to manage such risk exposures effectively; (iii) a significant increase in the premium payable by customers for the ‘Open Driving’ optional additional cover; and (iv) a negative impact on the commercial viability and long-term sustainability of that cover option.

The Respondent submits that it has an obligation to take account of our claims and underwriting experience to ensure we protect our customers in the long term, and we constantly review the performance of our policies and adjust rates and acceptance criteria according to that claims and underwriting experience.

Witnesses for the Respondent

Ms Cathy Sheahan gave evidence on Affirmation on behalf of the Respondent.

Ms Sheahan stated that she is the Personal Lines Pricing Lead.  She has been employed by Aviva for eight and a half years.  Before joining Aviva she worked in various insurance companies for some 20 years. Ms Sheahan has a BA in Maths, Science and Computers.  She is a qualified Actuary and is a member of the Society of Actuaries in Ireland.

In her evidence Ms Sheahan explained how the Respondent carries out a considerable amount of analysis before it decides on policies and products. She explained the Statistical Model Data Set document provided by the Respondent.

Ms Julie Frazer gave evidence at the hearing on behalf of the Respondent.

Ms Frazer stated that she is the Personal Lines Products and Undercutting Lead. She has been employed by the Respondent for three years and has 25 years’ experience in the Insurance Industry.

Ms Frazer explained that she takes the information provided by Ms Shean and uses this as the basis on which to develop policies.  Ms Frazer stated that it is very common in the industry that age is taken as a factor in Open Driver policies and if Aviva was prevented from including it as a factor it would probably result in the removal of the option.

In concluding, the Respondent asserts that it has met the threshold required to demonstrate that it can rely on S5 and the complaint should be dismissed.

I have considered this matter very carefully.

Section 38A of the Equal Status Act, 2000, states:

Burden of proof.

38A.—(1) Where in any proceedings facts are established by or on behalf of a person from which it may be presumed that prohibited conduct has occurred in relation to him or her, it is for the Respondent to prove the contrary.

First, I must assess whether the Complainant has succeeded in establishing a prima facie case. In order to do so the Complainant must satisfy three criteria in relation to his complaint. He must (1) establish he is covered by a discriminatory ground (in this case age ground); (2) it must be established that the specific treatment alleged by the complainant actually occurred and (3) there must be evidence that the treatment received by the Complainant was less favourable than the treatment someone who was not covered by the discriminatory ground would have received in similar circumstances.

So, has the Complainant establishes facts from which it may be “presumed” that there has been direct or indirect discrimination?

I find he has.  The Complainant is over 70 years of age and precluded from availing of the open drive option included in his brother-in-law’s insurance policy because he is over 70 years of age. It is clear and not contested that the Respondent imposes a limitation on the Open Driver Option based purely on age. It is clear he was treated less favourably than a comparator within the age range of 30 to 69 years of age.  This being the case it is for the Respondent to prove that their limitation is not in breach of the Act.

The Respondent points to section 5 of the Act, which they say allows them to discriminate on age grounds and that they are not in breach of the Act when applying limitations on the Open Driver Option of motor insurance policies.

Section 5 of the Act states:

(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) Subject to subsections (4) and (4A), subsection (1) shall not apply in respect of—

(a) an activity referred to in section 7(2),

(b) a service related to a matter provided for under section 6, or a service offered to its members by a club in respect of which section 8 applies,

(c) differences in the treatment of persons on the gender ground in relation to services of an aesthetic, cosmetic or similar nature, where the services require physical contact between the service provider and the recipient,

(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

(III) is reasonable having regard to the data or other relevant factors,

It should be noted that section 5(2)(d) of the Act provides that the general prohibition on discrimination does not apply to differences in the treatment of persons, in relation to, inter alia, “insurance policies or any other matters related to the assessment of risk” where the treatment is effected by reference to reasonably reliable actuarial or statistical data or other relevant underwriting and commercial factors and where it is reasonable having regard to those data and factors.  Special provisions are made for this exemption in the context of discrimination on the ground of gender in section 5(2)(da) and section 5(3).

In order to avail of the exemption a Respondent must show that a difference in treatment is (1) effected by reference to actuarial or statistical data which was obtained from a source on which it was reasonable to rely and 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 relevant factors.

Therefore, I have to assess (1) whether the method employed by the Respondent provides actuarial or statistical data upon which it is reasonable to rely in setting the premiums quoted to the Complainant in this case (2) and/or whether the method employed by the Respondent or whether there are other relevant underwriting or commercial factors upon which it is reasonable to rely having regard to the to the data or relevant factors.

I relation to (I) and (2) above, I have given careful consideration to the information submitted by the Respondent and the evidence given by Ms Sheahan.  Ms Sheahan’s evidence was clear and cogent, her in-depth understanding of the methodologies utilised was evident.  She is a highly qualified actuary and a credible witness.  I am satisfied that the information submitted by the Respondent allied to Ms Sheahan’s testimony clearly demonstrates that the method used by the Respondent provides actuarial and statistical data upon which it is reasonable to rely upon in setting the premiums and limitations of an insurance policy with regard to the Open Driver Option. The evidence provided by Ms Frazer only serves to support this finding. I also find that there are other relevant underwriting or commercial factors upon which it is reasonable for the Respondent to rely.  I am therefore satisfied that the respondent is entitled to avail of the exemption allowed in section 5 of the Act.

Even if less favourable treatment was established under Section 5(1) of the Act, the meeting of the conditions set out in Section 5 (2) (d) dictate that such treatment is not discriminatory.

The Complainant was not discriminated against, and the Respondent did not engage in prohibited conduct.

Age, discrimination, Insurance