Merlyn Holkar, Senior Research Officer, Money and Mental Health
Insuring a fair deal for people with mental health problems
4 June 2019
A few weeks ago the Treasury Select Committee, an influential cross-party group of MPs, published an important report on access to financial services.
Having submitted evidence to the committee – including in person – we were delighted to see the Committee back our Stop the #DebtThreats campaign, call for access to cash to be protected in our increasingly digital world and advocate a “universal design” approach to make services more inclusive. But in addition to all this, the Committee also made some important recommendations on access to insurance for people with medical conditions, including mental health problems.
What’s the problem?
People buy insurance to protect themselves financially and for peace of mind, so that they know there’s a safety net in place if they have to go off work sick or if their luggage gets stolen when they’re abroad. However, we found that purchasing travel insurance in particular can be a stressful and expensive experience for people with mental health problems.
While many people with mental health problems expect to pay more for their insurance than somebody without any health issues, the markup often seems excessive. Money and Mental Health research has found that 43% of people with mental health problems feel travel insurance prices are unfair and 13% have travelled without insurance because it was too expensive.
“I think we are incredibly overcharged. This has prevented me on the last few times I’ve been abroad from buying insurance. This could be dangerous for me or anyone with a mental illness.”
In a mystery shopping exercise last summer, we found that prices can drastically increase when people disclose they have had a mental health problem, even for those with historic conditions that haven’t affected them for years, and others with a mental health problem that is well-managed and stable.
The Equality Act should protect people from discrimination based on personal characteristics like their race, gender or disability, and it sets out clear rules for the insurance sector. Insurers are only allowed to charge people with disabilities more for their insurance if this price difference is based on reliable and relevant information about the risk that is being covered. So any insurer discriminating without a sound evidence base is breaking the law.
“My bipolar has never affected a trip, I follow all medical instructions as required, and they charge me 100% to 300% more than if I didn’t have it (I check).”
The Treasury Select Committee calls for action from regulators
It’s clear that the Committee wants to see decisive action taken to make sure people with health conditions get a fair deal in vital insurance markets. It expressed concern that the financial regulator, the Financial Conduct Authority (FCA), chose not to look at how insurers determine prices for people with health conditions during a recent inquiry into access to insurance.
The Committee also found that existing mechanisms for enforcing insurance protections under the Equality Act are inadequate, and that there is too much onus on individual consumers to police breaches of the law. To remedy this, the Committee recommend that the FCA take responsibility for assessing insurers’ compliance with the Equality Act, and addressing any illegal discrimination they find.
This is a welcome step, which echoes our own calls. It is clear that Equality Act protection is not functioning as required in the insurance market, and there is more than enough evidence that people with mental health problems can face significant price increases to warrant closer investigation. The FCA is the only organisation capable of accessing the commercially sensitive pricing and risk models that insurers use to determine prices, and assessing their compliance with the Equality Act. We hope that Government will recognise these concerns, back the Committee’s calls and push the FCA to take further action.
You can watch our Head of Research and Policy, Katie Evans, giving evidence to the Treasury Select Committee here.
You can also find the full Treasury Select Committee report here.