Resent findings have shown how travel insurers are taking advantage of elderly travellers by assuming that they should pay a higher premium. Elderly people who go on holiday and who are in their late 70s or early 80s are charged higher travel insurance fees in comparison to people who have jut retired although the cost for covering their trips having fallen.
In general, there is a trend that travel insurance gets more expensive as people get older due to the increase in the likelihood for an accident occurring or a medical problem happening while abroad. As a result of this, elderly people are a higher risk than younger holiday makers and as such they have to fork out more money to get insured.
However, an analysis of claims and the insurance market has shown that people in their late 70s are far less likely to make a claim in addition to the cost for compensating each claim being smaller. Statistics showed that a 61-year old had a 7.2% likelihood of claiming under their travel insurance policy while an 81 year old holidaymaker had only a 4.3% chance.
The founder of Fairer Finance, James Daley, which focuses on compiling data said that under the normal circumstances of how the market works and how insurance premiums are calculated one would expect for the cost of travel insurance for the elderly to fall. However, according to the analysis the premiums continued to rise.
The average annual premium for a holidaymaker aged in the category 76 to 80 paid a fee of £80 while people 10 years younger would only have to pay £68 for their premium. On the other hand, travellers going abroad in their 80s would fork out an astonishing £132 for insurance cover. Mr Daley stated that he believes the insurance market is taking advantage and cashing in on consumers’ expectation that the prise of insurance increases with age rather than it being based on statistics.
Mr Daley continued by saying “insurers have got you used to paying more, so they continue ratcheting up premiums even though costs fall. The irony is rarely lost on the newly retired – just as they have the time and money to travel, their insurance premiums go through the roof.”
An ABI spokesperson justified the fees by saying “some older travellers may continue to buy annual policies because of their convenience, but take fewer holidays, resulting in a lower claim frequency and average claim per policy.”