Insurance and drivers - EU proposals and national law are pulling in opposite directions, writes Dorothea Dowling.
The announcement yesterday by the Equality Authority of a settlement in favour of a 23-year-old male who was refused a quotation by First Call Direct in November 2001 will be welcome news for those who consider themselves unjustifiably discriminated against by insurers.
But the development may be less welcome news for the Dutch EU presidency to whom it has fallen to advance a Directive which has divided member-states on whether gender can be used as an insurance rating factor.
However laudable the proposed directive on the principle of equal treatment between men and women in the access to and supply of goods and services might be in the overall context, Article 4 of the draft could cost Irish consumers dearly.
The EU proposal also conflicts with our national law which has now been further clarified by the latest announcement from the Equality Authority. The objective of Irish law is to ensure equitable pricing so that policyholders pay according to their risk.
How the risk factors are to be assessed, and the relative weightings to be assigned to factors, for example gender versus age - are a matter for actuaries and the free market which is guaranteed to insurers under several EU directives.
The Equal Status Act 2000 prohibits unjustified discrimination in the provision or pricing of insurance and this was first confirmed in 2003 by a decision of the Equality Tribunal.
In a landmark ruling the refusal of a motor insurance quotation in 2001 by Royal and Sun Alliance to Mr Jim Ross was found to be discrimination on age grounds under the new Act.
Mr Ross (77) had a seven-year no-claims bonus. The equality officer of the tribunal, in his finding, stated that the company's across-the-board policy of refusing quotations to people over 70 could not be accepted and he awarded Mr Ross €2,000. The Equality Authority, which represented Mr Ross before the tribunal, welcomed the finding.
"The key message of this case is that it is not acceptable to refuse a quotation based solely on a person's age with no account taken of the person's particular circumstances such as a person's driving history. Age limits in the provision of insurance are all too common. Insurance companies will now need to review any existing practices that are still in place where an individual is refused a quotation simply on grounds of age, as recommended by the Equality Officer," Mr Niall Crowley, the authority's chief executive, stated.
The 2000 Act prohibits discrimination in the provision of goods, services and facilities on nine grounds including age.
However, there are very broad exemptions that allow insurance companies to discriminate where the difference in the treatment of persons "is effected by reference to actuarial data obtained from a source on which it is reasonable to rely, or other relevant underwriting or commercial factors, and is reasonable having regard to the data or other relevant factors".
In the Ross case, the equality officer noted that the source and integrity of the data which the insurance company sought to rely on was called into question. Moreover he discovered that:
Royal and Sun Alliance's policy had no regard to the Declined Cases Agreement which specifically states: "No insurer shall decline a risk on the grounds of age of driver alone."
Royal and Sun Alliance had previously indicated to the Motor Insurance Advisory Board (MIAB) that - in respect of older drivers - it does not quote unless there is a five-year bonus.
The Equality Authority welcomed the equality officer's finding that "what cannot be accepted is the complete refusal of a quotation based solely on a person's age". The authority "continues to be concerned that the exemptions available under the Equal Status Act for insurance companies are too broad. Despite this important decision we continue to recommend that the exemption related to relevant underwriting or commercial factors should be deleted," Mr Crowley concluded.
The 2003 annual report of the authority shows there were 53 inquiries relating to car insurance and 20 to health insurance. Of the 41 inquiries that became official cases, the grounds of alleged discrimination were:-
Gender 4
Sexual Orientation 2
Age 21
Disability 5
Race 5
Traveller community 1
Mixed 3
One might wonder why the authority did not pursue the case against First Call Direct to a full hearing before the Equality Tribunal to secure a strong legal precedent rather than entertaining a settlement.
Perhaps it is because these cases are very complex and thus expensive to run. Given its scarce resources, presumably the authority chooses its battles carefully.
Aggrieved policyholders do, however, have an additional option if the issue relates to age or gender - complain to the Insurance Ombudsman. The ombudsman's terms of reference now encompass breaches of the IIF Code of Conduct established to implement relevant MIAB recommendations in April 2002 against unjustified loadings for age or disability.
Whether Europe decides to deprive us of such devices to ensure equitable pricing will depend on how convincingly the Department of Justice persuades other member-states that, when it comes to insurance pricing, sex is good for you - provided you are a woman!
• Dorothea Dowling is chairperson of the Personal Injuries Assessment Board