Q60 Do you have any views on how, if we decide to legislate, we can target the legislation to avoid unintended consequences and disproportionate burdens on both public and private sectors?

3.1 RBS Insurance agrees with the Government’s proposals to ensure that any legislation addresses negative age discrimination without preventing different treatment on the grounds of age which has positive consequences or is justifiable. We welcome the inclusion of age as a factor in underwriting insurance (9.9) as an example of legitimate age differentiation.

3.2 RBS Insurance strongly urges the Government to ensure that any legislation includes an exception for insurance in order to avoid unintended consequences and disproportionate burdens on insurance companies.

3.3 Legislation without an exception for insurance could prevent the use of age as a rating factor, despite insurers’ experience showing its relevance. If premiums were standardised across all age groups, the cost of insurance would increase for everyone, including older people. It would mean that costs of premiums would be divided equally between customers. For example, novice younger drivers would be rated as the same risk as experienced drivers, regardless of the increased risk they pose or likelihood of making a claim. Equally, older people would experience higher home contents insurance premiums, for which they currently enjoy the lowest premiums. If such measures were imposed, an unintended consequence could see 25 – 50 year olds claiming unfair age discrimination because they would be over-subsidising the proven risks that younger and older customers pose on most insurance products.

3.4 An agreement to provide actuarial data to justify different treatment on the grounds of age would be a more appropriate way to tackle concerns about age discrimination in the insurance industry, as well as ongoing work to improve signposting to a wider choice of available cover.
Q61 Do you have any comments on any of the issues which would arise with a legislative approach to tackling age discrimination?

4.1 A legislative approach to age discrimination, without an exception for insurance, could have a number of significant consequences:

• Legislation would place further regulatory burdens on our business. The higher costs entailed in this could lead to higher premiums. Equally, further regulatory burden would not be in line with the Government’s commitment to better regulation;

• Insurers could pull out of the market, particularly specialist providers, rather than underwriting in an area where they feel they cannot price appropriately. This could lead to a decreased choice of supplier for the consumer;

• Insurers, and financial services generally, could face increased challenges through litigation if a legislative approach was undertaken. This would be a further burden on business and add to the impact of points one and two above.

Annex B: Implementing the Gender Directive

Q79 Do you agree with the proposals in Table 1?

5.1 RBS Insurance agrees with the proposals in Table