Penalised for 'driving while retired'

Insurance Helpline with Cedric Stephens

Question: I am a 74-year-old teacher who recently retired. I am still quite active and in fairly good health. The odometer on my 10-year-old Toyota motor car reads 60,000 miles. I am the main driver and have an excellent record with no accidents or driving violations.

My premium increased this year by 7.1 per cent, even though the estimate of value of my car declined by J$20,000. When I asked my broker to seek a lower quotation, they said that no other insurance company was willing to insure me. This does not seem fair.

Can you please look into this matter and tell me what to do?

- D.F.C. Kingston 10.

HELPLINE: Bias against elderly persons is alive and well. This is a local and regional problem. Motor insurers are one of many groups that practise this kind of discrimination. A Jamaica Constabulary Force (JCF) policy, according to one cop, assumes that "any (member of that body) over 30 is not (energetic) and trainable".

Human rights and ageing experts of the Organization of American States concluded at a meeting last month that "the needs of the older population ... and rights deserve special promotion and protection ... (because of) age discrimination that exists in the region".

This is the scale of the challenge that you - and, to be frank, I - face when we buy motor insurance.

Orville Johnson, executive director of the Insurance Association of Jamaica (IAJ), rejects the charge that motor insurers "discriminate against elderly customers".

His comments were made in response to my assertions in an email dated September 22 that "all registered (motor) insurance companies ... have taken a decision not to accept proposals ... from persons 70 years old and over".

The result is that buyers in this group "have no option but to accept increases in premium, irrespective of whether such adjustments are actuarially justified".

The industry was not "effectively (or de facto) running a cartel," to the detriment of elderly drivers, Mr Johnson said. Insurers "compete for business vigorously in a tough marketplace ... companies continue to insure persons beyond 70 years of age routinely where they are established customers with good driving records".

If a customer chooses to switch insurers, "the new company would have to satisfy themselves that the person is a good risk. Companies also at times do ask customers over 70 years of age to do a medical to ensure that their health is satisfactory to operate a motor vehicle."

This, he argues, "is understandable, and any reasonable person would agree that with age, a driver's reflexes will slow, and the person's ability to drive defensibly (sic) will tend to diminish, both of which will pose certain risks given the challenges of driving on Jamaican roads".

Inequality

The questions that the IAJ head answered were posed in the context of an article I wrote on this subject: "Elderly account for few accidents, but deemed high-risk" (published January 17, 2010).

A copy was sent to him. The article said elderly drivers accounted for 3.1 per cent of 30,025 accidents reported here during 2007 and 2008. Adult drivers between 21 and 60 years old were responsible for 83 per cent.

That data was not contested, or the statement that "one in five older people are refused quotations for motor insurance" in the UK, and that legislation had been introduced in that country "to prevent inequality and discrimination on the basis of age".

Since my comment that "all registered motor-insurance companies have taken a decision not to accept proposals from persons 70 years old and over who are not existing customers" was not confirmed or denied, it seems that consumers in this age group - to follow the logic of the IAJ statement - are "bad risks", and should remain wedded to their existing insurers until they stop driving or pass away.

The association has not supplied any data to support its position. Interestingly, a recently released US study, conducted by the Insurance Institute for Highway Safety (IIHS), indicated that "older people are driving more, crashing less, and their fatal-accident rate has dropped by 37 per cent".

The biggest drop of all - 47 per cent - came from among drivers over the age of 80.

IIHS is an insurance-industry group whose research benefits from federal highway statistics and data collected by US auto insurers. My suspicions are that the same thing is probably happening here, but our insurers are not paying any notice.

Is there a solution to the insurance part of the problem in the offing? I do not know.

National Security Minister Senator Dwight Nelson reportedly has "reservations about discrimination against age" in relation to the JCF policy. One wonders whether his colleague Finance Minister Audley Shaw has similar doubts in relation to the transaction of a class of insurance which is compulsory by law and falls under his portfolio.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance.aegis@cwjamaica.comSMS/text message to 812-7233.