Government measures could mean higher insurance premiums

According to a recent report measures that are being taken by the government could result in consumers being charged higher premiums for certain types of insurance cover. It is thought that the types of insurance cover that could be affected by higher premiums include vehicle insurance and travel insurance.

The higher costs are likely to come about because of a ban on age discrimination within the insurance industry, which the government is looking to impose. For insurance cover such as vehicle and travel insurance the cost of premiums is often based on age amongst other things, but a ban on age discrimination could mean that the higher costs are then transferred to all customers rather than just the higher risk ones.

An official from the Association of British Insurers said: ‘The age discrimination legislation may be well-meaning, but it creates unintended consequences. At the end of the day, what we are assessing is risk. And in this respect age is a factor. We won the argument over the relative risk between men and women drivers. We hope ministers will listen to reason over age.’

Another ABI official added: ‘Insurers only use age where it is relevant, and restricting their ability to do so would rebound on all customers, through higher premiums.’