A new Government proposal aimed at changing sex discrimination laws has sparked controversy within the PHI industry.
A parliamentary watchdog is to recommend that women cannot be charged more for health insurance because they are likely to live longer or have more time off work.
Tradition decreed that insurance companies charged different rates for different genders. And statistics through the years backed up the claim that men and women are inherently dissimilar.
According to Ingrid Brandon, market strategist for Swiss Re Life and Health, pricing differentiation is historic. Her colleague Sue Elliott, the company’s health and care actuary, added: “We have completed an in-depth analysis, covering 2,500 claims. Female initial rates are higher than male’s. And they don’t terminate claims as soon as men.”
Women have always paid more than men for PHI. Statistics demonstrate that they have a greater propensity to long-term sickness and disability.
One plan from UNUM, a disability insurer, for a 35-year-old man earning £30,000pa, would charge £17.59 a month for a £15,000 yearly pay out. The female equivalent would be charged £25.34.
The basis for changing the laws governing PHI premiums boils down to a call by the Equal Opportunities Commission to end sexual discrimination. Lorraine Fletcher of the EOC summed it up: “Insurance companies have been charging different rates for men and women when their sex is a secondary consideration to other factors such as where they live, their lifestyle and occupation.”
But insurers and intermediaries assert that gender is a key factor. Nick Lomas, marketing manager of UNUM, said: “Men and women suffer from distinct illnesses. The differences in terms of the illnesses they get are demonstrated by the statistics by which insurance companies set their prices.”
Similarly, Ted Yeates, consultant with IFA Warwick Butchart considered that the whole issue is not even worthy of serious discussion. He maintained it must be recognised that men and women are not equal in terms of health.
“Insurance is about risk assessment and risk management. It is very dangerous to say men and women should be treated the same and disregard the fact they are different. It is wrong to ignore statistics” he said.