John Dean (pictured), head of health and protection at national specialist intermediary Punter Southall, points out that the outlook facing group risk isn’t as bleak as that facing private medical insurance (PMI) if the default retirement age is abolished and insurers fail to obtain a suitable exemption.
He points out that group life premiums have been declining for a decade and that group critical illness cover and income protection premiums are broadly static whereas PMI inflation has regularly been running at 8 or 9 per cent a year.
Dean says: “Health insurance benefits get more expensive as you get older and in the current financial environment companies are unlikely to
be able to pay more, so they will have to change things. Income protection will meet the increased costs by moving to limited term but PMI will ultimately have a big problem and will have to take out chunks of benefit by introducing large excesses and reducing cancer cover.
“Eventually PMI would effectively have to become part paid, with the employer paying up to a certain amount of the premium and the employee being invited to contribute towards the rest. This is what has already happened with pensions for years but it won’t happen with income protection because it is a benefit for the company.
EQUALITY FOR ALL
The Equality Bill, introduced in April 2009 by the Government Equalities Office (GEO), seeks to consolidate all equality legislation under one Act and will make discrimination on the basis of age in the provision of goods and services unlawful.
This January the GEO published its policy statement following its consultation on ending age discrimination in services and public functions.
For financial services, the statement announces that:
- A tailored specific exemption will be drafted allowing age to be used where this is fair and reasonable
- Age bands that keep prices down for consumers as a whole will be permitted
- Providers will be permitted to apply age limits on their products where relevant to risks or costs.
GRiD spokesperson Katharine Moxham, says: “The GEO’s policy statement is very important as it does demonstrate we have got our message through but the review of the default retirement age will ultimately determine what will be required of employers. GRiD and other trade bodies have worked very hard to help ensure the issues are understood and on the radar.”