Insurers woo the golden oldies

Age does brings benefits, particularly financial ones, when it comes to insurance premiums. But most older home and car owners are failing to take advantage of this and are paying far too much for policies because they do not shop around for competitive quotes.

Insurers are keen to attract the older customer - and older in this context means anything from 45 upwards - because they are considered lower risk. Retired homeowners stay at home more, and are consequently burgled less. And drivers become more cautious and safer as they get older - until around 70 when their skills begin to wane, and the premiums may start to rise. Older drivers also travel less far, and tend to avoid rush-hour journeys and bad weather.

One of the most competitive insurance providers for older people is Age Concern Insurance Services, a service provided by the Age Concern charity that had been worried at the lack of choice offered to retired people. Policies were too expensive and not sufficiently tailored to the older person - with the result that many were not covered by any home contents insurance.

Since Age Concern launched its insurance business 13 years ago it has attracted 400,000 customers, making it one of the largest insurers for the elderly, and earlier this year dropped its minimum age for customers to 55.

ACIS has produced a table showing it is generally cheaper for older home owners than its competitors - often markedly so. In the case of Manchester's M41 9WD code, ACIS charges pounds 94 a year for contents cover compared with pounds 238 quoted by Commercial Union. Even Direct Line, one of the keenest insurers on price, admits it is unable to match the quotes in most instances listed by ACIS.

Direct Line says, though, that quoting is seldom a straightforward matter. Existing customers, whose buildings or cars are insured by Direct Line, are entitled to discounts, and it offers a further reduction for membership of a neighbourhood watch scheme. Home-owners are also warned that while Direct Line and several other home insurers have introduced no-claims discounts, these are not transferable to other insurers - as they usually are with motor insurance - and this should be taken into account when comparing quotes.

The ACIS quotes were based on properties being safely secured, with mortice deadlocks on doors and good quality window locks. Commercial Union argues this could cost up to pounds 200 to instal, eliminating, in the short term, any premium saving.

Another difference between ACIS and many of its competitors is that policies can be arranged for lower levels of cover. Commercial Union's minimum contents cover is pounds 14,000, but ACIS offers cover for just pounds 5,000 worth of contents. While ACIS is particularly competitive it is only one of several insurers that has targeted the market for older people. Others who specialise include Ansvar, the Retirement Insurance Advisory Service, a commercial organisation, Saga (an extension of the specialist tour operator), and CGT Direct, while all the biggest insurers offer discounts for age or for being at home most days. Premium reductions are also available for policyholders who accept a larger excess - as much as a 25 per cent discount if the individual meets the first pounds 250 of any claim. A no-claims discount on a household contents policy can also be worth pounds 40 a year.

Large premium reductions are also available for older car owners, with the same specialist providers offering policies. Drivers should be warned, though, that discounts come at the price of inflexibility. Research by Commercial Union found about a third of motor claims from mature customers arose from accidents while teenage sons and daughters were driving. For the cheapest premiums it is necessary to ban younger adults from driving, and temporary cover for the unexpected emergency can be almost impossible to arrange.

ACIS claims to undercut many other motor insurers by as much as 50 per cent. RIAS, the largest specialist provider to older people, also offers policies cheaper than many general insurers, as well as a car breakdown policy. RIAS says its breakdown service is "much, much lower cost" than the AA, RAC or National Breakdown, because mature drivers constitute a lower risk, by ensuring cars are maintained better, and by driving fewer miles than younger drivers.

Led by direct-selling insurers and specialist providers, the insurance industry is going through a shake-out, which is removing cross-subsidies, and matching premiums to actual risks much more precisely than has ever before been the case. Some of the general insurers have been slow to respond, but are now creating a much more flexible premium structure to the benefit of older and other low-risk customers.

Norwich Union changed its premium pricing system this year. The old system allocated motor insurance customers 100 points, with points added for convictions, and deducted for age and no claims bonuses. But this system was inflexible because amendments could only be made in five-point chunks.

"In August we went to a percentage basis, and we can make changes by individual percentages if we wish," says James Duffell, spokesman for Norwich Union. "We have a sliding scale according to age, starting from 25, and as a person gets older the rates get substantially better, with discounts for people who are retired, and other discounts for women, but less so as they get older. It also depends on where you live. We can now introduce many more factors."

Which means that you do not have to wait until 65 before you can gain the benefits of being older. Even those insurers that still have a specific cut-off point for the older person's discounts are bringing them down - Commercial Union has just cut it from 55 to 50, and Eagle Star gives a 10 per cent discount for being aged between 45 and 64. After that insurers may require an annual doctor's examination.

Contacts: Age Concern Insurance Services, 0345 125816. RIAS, 0800 552100. Ansvar, 01323 737541. CGA Direct, 0800 525200