MSE News

Urgent action needed to prevent people with mental health problems paying 'sky high' insurance prices, says charity

Urgent action is needed from the financial watchdog to prevent vulnerable people from being overcharged for insurance products. Charity the Money and Mental Health Policy Institute (MMHPI), which was set-up by founder Martin Lewis, has issued the calls after finding people with mental health problems are being charged 27 times more for insurance than non-sufferers.

As well as pricier insurance premiums, the MMHPI says mental health sufferers are also being offered reduced cover or are being refused insurance altogether — sometimes even when their conditions are stable and manageable. 

Those impacted are then often left unable to afford insurance and more likely to go without cover, the charity warns. It adds that is also concerned some firms may be breaking the law by discriminating against those with mental health problems.

The charity, along with its founder Martin Lewis, are now calling on regulator the Financial Conduct Authority (FCA) to investigate whether people with mental health problems are being treated unfairly by insurance firms - and asking it to punish those firms that do. 

In addition, the MMHPI want the FCA to set out specific expectations for the industry around how firms can provide fair value for customers with mental health problems, particularly where cover excludes their mental health.  The charity is also urging insurance providers to be more transparent about how decisions are made. 

Martin Lewis, founder of the Money and Mental Health Policy Institute charity and consumer website, said: "Insurers have always profited from a grey fog of confusion that covers their prices. With each person often getting a bespoke quote, it creates an easy breeding ground for discrimination, and it is tough for any individual to be able to prove they have been harshly treated.

"The injustice behind that is heightened when the people who may be facing unfair discrimination are vulnerable. That’s why Money and Mental Health’s research is so important – to gather wide scale data which indicates those with mental health issues are sometimes being penalised, unfairly, possibly illegally, and resulting in them paying extortionate prices. 

"The regulator has already taken action to stop existing insurance customers being discriminated against, by having to pay more than new customers. So now we’re loudly calling on it to ensure firms obey their duty to consumers with mental health conditions and treat them fairly.”

People with mental health problems are paying a higher price for insurance

The research by the MMHPI looked at 15 travel insurance providers to see how disclosing a mental health condition would impact the insurance offered. Further surveys found issues to be common across the insurance industry, and not just associated with travel insurance. Key findings include:

  • Premiums that jump dramatically in price when customers disclose a mental health problem. The research found that those suffering with severe depression were being charged three times more than someone without. This jumped to around 27 times more for someone suffering with bipolar. 
  • Insurers excluding mental health conditions from their cover, without reducing prices. The research found that five of the 15 insurance firms included exclusions for mental health conditions, without reducing the price of the insurance product. This means people pay the same price for insurance products as non-sufferers, but are not covered for claims related to their mental health condition/s. 
  • Insurers refusing to offer cover to people with more severe problems. In its research, the MMHPI found nine out of 15 firms refused to insure a customer with severe bipolar disorder. This means many people with severe mental health conditions will not be able to access vital insurance.

What does the FCA say?

An FCA spokesperson said: "Firms are required to assure themselves, and us, that their pricing is not discriminatory, and they must not use data in a way that could lead to unlawful discrimination based on protected characteristics, in line with the Equality Act. We have taken action where we’ve had concerns with firms’ practices. We take any reports of customers being treated unfairly seriously and will take action where appropriate."

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