Extra Costs Commission urges action to tackle financial hit on disabled people

A new report by the Extra Costs Commission (ECC) has made a number of recommendations designed to tackle the financial penalties disabled people suffer simply going about their daily lives – and the insurance industry is singled out for particular action.

The research pointed to the monthly shortfall between the average additional monthly expenditure of £550 people with disabilities incur, against the average £330 paid to meet them by benefits such as Disability Living Allowance and Personal Independence Payments.

The commission examined the five products and services most frequently raised by disabled people when discussing the impact of the extra costs burden; energy, clothing and bedding, specialised disability equipment, taxis and minicabs and last but by no means least, insurance.

The latter was found to be the financial service most frequently mentioned by the 2,500 disabled people who took part in the research. Indeed its findings echoed points which we, as one of the UK’s leading disability insurance specialists, have previously raised. Prime among these is the questioning by the ECC of whether insurers “are up to date and in touch with information about disabled people and the risks they may really represent.”

‘The market isn’t working for disabled people’

Urging regulatory action the report argued the market generally isn’t working in the interests of disabled people, stating:

“If consumers are found not to have access to prices that adequately reflect risk, the study should consider what factors inhibit competitive markets and the remedies required to make the market work better for consumers.”

We have long argued that the mainstream insurance industry frequently fails to serve people with disabilities, mobility issues or long term medical conditions. With regards to car insurance we’ve previously highlighted on The Hub how a vehicle adapted to accommodate a disability might be treated, in particular by price comparison sites, as simply modified. This could see a car with, say, hand controls, being lumped in with those adapted to enhance their performance or look – and the premium hiked according. The reality according to our own experience is that disabled people and their vehicles present a lower risk so rather than load premiums, we discount them.

Affordable car insurance is even more vital to disabled drivers who, statistically, are likely to be significantly worse off financially and more dependent upon their vehicle.  The government understands this which is why it offers a VAT concession on cars and products which are designed or adapted for a disability. But that tax relief is meaningless if, having bought a car, a disabled driver cannot afford to fulfil the statutory legal obligation to insure it. That insurance does also, of course, attract Insurance Premium Tax, with no relief available.

Worryingly the researchers found that some 2.5 million disabled people felt they had been overcharged for insurance and reported that “at least half a million believe that they have been denied insurance because of their disability.”

‘Disability can be invisible to the market’

These findings highlight how disability can be as invisible to the market as it is aspects of wider society.  Whilst there are specialists like us the mass market seemingly ignores the needs of the 12m disabled people living in the UK and with it the £212bn their households spend annually.

So will things change for the better? The ECC has called on disabled people to do more to help themselves, making use of their collective financial might, to be “bold and loud” about their identity as disabled consumers and promote the virtues to business of the so-called “purple pound”.

It argues: “Only by sharing information about our needs and expectations as shoppers, by complaining and speaking up when dissatisfied and by being more demanding as consumers, will companies have the market data to serve us better and to help reduce the cost of essential goods and services. The benefits of presenting a collective voice have been seen with the gay community and amongst older people. It is our view that it is time for disabled people to take similar action.”

In addition it calls for the financial services industry regulator, the Financial Conduct Authority to “investigate whether disabled people and similar potentially under-served groups have access to insurance that fairly reflects risk.” With the FCA committed to taking forward the report’s recommendations then hopefully action will be taken to reduce and ideally eliminate the unfair penalties placed upon disabled people by mainstream insurance providers.

‘Seek out disability specialists’

What is abundantly clear is that whilst action is long overdue it won’t happen overnight. Our advice for now then is if you’re looking for to seek out disability insurance specialists, companies that focus on and therefore understand the market, the actual risks and the actual needs. These companies should offer more realistic premiums and cover that offers more suitable protection. As examples our disabled travel insurance covers the emergency replacement of a carer whilst adaptations are protected as standard with our disabled car insurance so you’re not left out of pocket following a theft or accident write-off.

So be bold, be loud and be smart to make sure you’re not penalised on premium or short-changed on cover by businesses that, it seems from this report, seem little interested in courting your custom.

• To read or download (as a PDF file) the full Extra Costs Commission Report click here