Money: Punished for being unlucky

Do the disabled suffer discrimination when buying insurance products? Many disabled people think so, a view endorsed by a wide range of charitable organisations which operate on their behalf. Iain Morse investigates

The Disability Discrimination Act, passed in 1995, was intended to outlaw discrimination against the disabled in the workplace. Clauses relating to insurance products were added to the Act and took effect in December last year.

They specify that insurers must charge standard rates for life insurance offered to disabled persons unless they can demonstrate that there are statistical or medical grounds applying to an individual that justify either increasing premiums or declining the application.

Insurers claim there was no need to amend the Act. Graham Austin, chief underwriter at Munich Re, says: "The Act has not changed our attitude to the disabled because we were not prejudiced in the first place. If we can possibly underwrite then we will."

Suzanne Moore, of the Association of British Insurers (ABI), the industry trade body, adds: "It may be sound hard-hearted, but insurance companies are not interested in whether someone is disabled as such. They want to do business and if a consumer group offer this prospect, cover will be made available."

But the disabled and those working alongside them themselves do not agree.

Alan Dickson, chief executive of Capability Scotland, an organisation campaigning on behalf of the disabled, says: "We have always been concerned that hidden under a mass of calculations and rules, there is from day one unfair bias against disabled people which has nothing to do with whether they are a greater insurance risk or not. It comes down to ignorance and negative attitudes. What we commonly find is that disability is mixed up with illness."

Insurance companies base their underwriting decisions on actuarial tables showing the incidence of various types of illness and the average age at death among different classes or groups of those applying for insurance. Common factors taken into account include age, sex, medical history, smoker status, and so on.

At Munich Re, Mr Austin explains: "Sample sizes for any group must be large enough for us to make a decision based on statistical analysis. If only say 10 people suffer a particular condition, then this may be impossible.

"However, if there is any difficulty in reaching an underwriting decision on this basis, the proposal for insurance should be referred to the insurance company's chief medical officer, who can make a decision based on a particular individuals' medical history."

Sine the Act came into force no cases of discrimination have been reported under its terms. Yet substantial hearsay evidence remains that the disabled feel they do not get a fair deal.

Ms Moore defends the industry, but also hints at an explanation for this. "Is the person looking at your application competent to deal with someone disabled, and do they understand your special requirements?" he asks. "If you are in any doubt about this ask for the matter to be referred to a higher level. Dealing with a broker or independent financial adviser (IFA) is also recommended, as opposed to going to just one insurance company."

Roger Smythe, managing director of Mencap City Insurance Services, set up by Mencap to provide non-life insurance products for the disabled, feels that the industry still has some way to go. "There is ignorance about disability at the highest level of the insurance industry," he says. "Each insurance company should have a special disability section set up to which all relevant applications are referred."

Mencap City Insurance Services is on 0121 2332722; for a free ABI guide, `Insurance for disabled people', call 0171 600 3333.