Last week, the Association of British Insurers (ABI) published updated guidance on how insurers should treat people with convictions. The guide, first published in 2011 and revised in 2014, has been updated this year to reflect recommendations made by Unlock.
In research we published in September 2017, we found major problems in the way that insurance companies dealt with the criminal records of people applying for home insurance. We looked at the approaches of 42 high-street insurance companies and found that two-thirds failed to make it clear to people that they didn’t need to disclose convictions that were ‘spent’ under the Rehabilitation of Offenders Act 1974. We found that nearly 1 in 5 companies took into account a spent conviction when considering an application even though they were under a legal obligation to disregard it.
We recommended that the insurance industry updated its good practice and that insurers should implement clear and consistent wording in relation to asking about unspent convictions.
The ABI describes the aim of the updated guidance published last week as being “to ensure that insurers:
- Only seek information about information relevant to the risk, asking clear, concise and explicit questions about unspent convictions. Spent convictions do not have to be disclosed and – if they are – insurers must ignore them;
- Make clear to customers the consequences of not disclosing, or misrepresenting unspent convictions;
- Ensure that staff are fully trained on relevant laws and regulations; and
- Assist customers in finding insurance, through signposting and/or referral arrangements where they are unable to provide cover themselves.”
It is welcome to see the updated guidance be much clearer to insurers that they should not be asking questions which could lead customers to thinking they need to disclose spent convictions. However, in our 2017 research we also highlighted the blanket approaches taken towards applicants that declare any type of conviction. None of the companies gave any individual consideration online – 100% of the insurers refused to offer a policy online to an applicant that disclosed conviction, without any specific consideration about the relevance of the offence to the policy being taken out. Only one company offered a policy over the telephone.
Although the guidance is clear to insurers about only considering unspent convictions, it fails to explain the evidence base for approaching unspent convictions in such a generic way and appears to simply assume that any unspent conviction is material for insurance purposes. There remains a significant lack of transparency about what, if any, evidence insurers rely on. Critically, we have never seen any robust evidence for the claim that correlates criminal records with a higher insurance risk. Quite the opposite. The specialist brokers that work quietly behind the scenes have some of the best claims ratios of all of their customers. The updated guidance fails to address this.
It remains to be seen what impact this updated guidance will have on the practices of insurers. What is ultimately important is that insurers themselves update their policies and practices. This updated guidance is a welcome step forward towards achieving this, and we look forward to seeing how the ABI will be monitoring the take-up of this guidance amongst its members.
Written by Christopher Stacey, Co-director of Unlock
The ABI guidance is available here.