Why older people face unfairly high insurance costs
So what's going on, and why?
Cost of insuranceWhich? investigated the cost of insurance for a range of older age groups. They found that those in their early 80s are hit the hardest, and are quoted premiums between 50% and 74% higher than people 40 years younger. This is despite the fact that they are less likely to make a claim, and when they do, the claims are only for 2% more on average.
Similarly, those in their late 70s are paying between 9% and 23% more for their insurance than those in their early 40s - despite the fact that their claims are 12% less on average.
So why is this happening?The ABI claimed that this was partly because Which? was using price comparison sites for its research and it said that the prices on these sites did not necessarily correlate to what older people were paying for cover. Which? disagreed.
So, assuming Which? is right, why are premiums higher?
The issue is nothing to do with driving ability or safety. A survey by Admiral found that elderly drivers were actually the biggest irritation on the road for younger motorists - with 41% of them finding them annoying.
Sue Longthorn, Admiral managing director, said:"The reason so many people find elderly motorists irritating could be because they tend to drive more carefully and are not in such a rush compared to many other road users. So many motorists are in a rush these days they get impatient with anyone they think is slowing them down." It certainly doesn't sound like a group that is likely to be in more accidents.
Less coverPart of the issue is the fact that older drivers are simply not covered by many of the major insurers. In fact, once you reach the age of 85, almost half of the biggest insurers won't cover you. As you age, therefore, fewer companies are competing for your business, so prices get less competitive.
Another contributing factor is that the number of older drivers on the road is increasing. With fewer insurers covering them, and 25% of all drivers on the road over the age of 65, there are lots of drivers chasing fewer policies. Insurers are keen not to get too many people from each age group on their books, as it focuses their risks, so once they start to see a lot of older drivers, they will bump up the premiums.
And finally, the fact that insurance claims are for marginally larger sums from older people indicates a specific risk that insurers are alive to. While the vast majority of drivers are safe and perfectly aware of their abilities. There are some who are driving past the age when it is entirely safe, and these individuals could well write their car off discovering the limits of their abilities. The insurance companies are simply writing this risk into their premiums.
But what do you think? Is it fair? Let us know in the comments.