Insurance firms penalise those who take part in hazardous sports
by HELEN PRIDHAM
© and reproduced courtesy of http://www.heraldscotland.com
Many insurance companies are unnecessarily penalising people who want to take out life or health insurance if they take part in what they regard as high risk hobbies, according to one leading friendly society boss.
Those engaged in pursuits such as climbing, parachuting or diving are often charged inflated premiums or denied cover if they want to take out life insurance or income protection.
Those involved in hobbies deemed hazardous by insurers believe underwriters find it difficult to interpret the risk involved and do not recognise how much more safety conscious participants are today compared with years ago, or how much better their equipment is.
David Gibson, Chief Officer of the Mountaineering Council of Scotland, says: “Although there is no adventure without risk we believe the risk can be managed.”
Recent figures from Scottish Mountain Rescue show that over the past year mountaineering deaths fell to their lowest number for 30 years.
Paul Hudson, chief executive of the Cirencester Friendly which specialises in income protection policies, says: “People who ride motorcycles on tracks or engage in mountain biking as a hobby are likely to be penalised, while people who ride motorcycles or bikes on busy roads are not even though the risk is probably higher.” Cirencester provides income protection cover, which pays out a replacement income in the event of illness or injury preventing someone working, without charging extra or excluding hazardous pursuits from its policies.
Many other insurers take a different view when people are applying for protection. So says David Hallam, director of Summit Financial Services, an adviser specialising in finding cover for climbers, hill walkers and mountaineers, and those with other hazardous hobbies.
People often run into problems when they seek protection insurance for a mortgage, Mr Hallam says: “Borrowers with high risk hobbies who want protection for their mortgage sometimes come up against a brick wall if their lender is tied to one insurance company and that company isn’t prepared to cover them while they are participating in their sport. Some people think the best solution is not to tell the insurance company about their hobbies but this is like sticking your head in the sand. If insurers find out they can void the policy, even if you have been run over by a bus rather than, say, injured on a mountain, and they could repudiate your claim. My message is that you must disclose what you are doing and get the right cover.”
Some insurers may take a different approach when quoting for different types of cover. Phil Stafford, Scottish Provident and Bright Grey’s head of underwriting and claims, says: “If someone has a hazardous hobby, we’d prefer to offer them life or critical illness cover and not include any exclusions. Our approach would be to look at the risks involved and decide a suitable premium.”
He admits that when approached recently by a white water kayaker seeking income protection, Scottish Provident refused cover for this activity due to a lack of accident statistics.
Mr Hudson is critical of his fellow insurers taking this approach when they have no evidence to justify it. He points out that Sunday League football can lead to injuries but participants are not asked to pay higher premiums. He says: “How many claims do companies get from people who are injured in hazardous sports? In our experience it is very few and the risk to company is therefore low.”
In order to help its members obtain cover at a reasonable price the Mountaineering Council of Scotland has teamed up with Summit Financial Services.
Many insurers find it reassuring to provide cover to members of clubs as they tend to be better trained and more safety-conscious than individual participants.
