A charity is calling on the Financial Conduct Authority (FCA) to formally review whether travel insurance pricing is fair for those with mental health conditions, as it is revealed that premiums can soar by up to 400% for those within the group.
Research published today by The Money and Mental Health Policy Institute reveals that almost half of people with mental health problems never disclose their illness to their travel insurer, potentially invalidating any insurance they might take out.
Through a mystery shopping exercise, the charity found that several insurers hiked premiums by more than 400% for people who disclosed mental health problems that have been stable and effectively managed for a very long time, with some insurers still declining to offer cover. Premiums rose by between 500% and 2,000% for those who disclosed more severe mental health problems, with most insurers either declining to offer cover at all or only offering cover that excluded mental health.
“We want the mainstream insurance market to work for everyone, which is why we’re asking the regulator to look into the fairness of risk and pricing models for people with mental health problems,” the charity’s director Helen Undy told Insurance Business.
Undy said that mental health problems can make it difficult for individuals to weigh up complex information, fill in lengthy forms and understand complicated terms and conditions.
“When combined with a confusing market that charges high premiums for mental health problems, and often excludes them from claims, it’s no wonder people are struggling to find cover that works,” she said.
The director said that the FCA is already working to improve signposting to specialist insurers, adding that brokers have a role to play too in helping people find the right cover at a reasonable price.
Specialist travel firm Just Travel Cover told Insurance Business that the research highlights the lack of understanding among consumers regarding what they need to declare before taking out travel insurance, as well as the importance of arranging cover via a specialist medical travel insurance provider that works closely with underwriters to ensure that the premium reflects the risk.
“Many factors are taken into account when premiums are calculated including age, medical conditions, planned activities, destination and trip length,” Dale Robinson, marketing manager at the firm, said.
“Premiums aren’t necessarily ‘hiked’ due to these conditions, however there are travel insurance schemes/products on the market that don’t cater for these conditions or any pre-existing medical conditions and, as such, it is these schemes that may increase premiums.”
Just Travel Cover, which specialises in insurance for those with pre-existing medical conditions, believes there is an opportunity for the industry to better serve customers in this group, Robinson said.
“Work is already underway as the FCA are currently investigating new ways to help customers with pre-existing medical conditions access the specialist travel insurance market,” he said.
“The industry as a whole must continue to educate people as to the risks of travelling without insurance, what constitutes a pre-existing medical condition and the implications of not declaring those conditions.”
