Charity group Money and Mental Health Policy Institute is calling on the Financial Conduct Authority (FCA) to urgently investigate whether people with mental health issues are being unfairly penalised by insurance providers.
It also wants the regulator to ensure that insurance pricing decisions are compliant with key financial regulations and legislation like the Equality Act 2010.
This comes after its research found premiums often sky-rocket after a customer discloses a mental health condition, sometimes even when the condition is stable or historic.
It found that someone with severe depression is being charged an average of three times more than someone with no medical conditions. This jumps to an average of 11 times more for someone with severe bipolar – with some people with this condition having to pay prices that are 27 times more than a person with no medical condition.
Shockingly, some people are seeing their premiums more than double even when they haven’t experienced symptoms in over five years. The testing suggests that some insurers view people as more ‘high risk’ when they are receiving treatment or taking medication – when it may actually indicate that someone is managing their condition well.
The research also found that many insurers exclude mental health conditions from the cover they offer, without reducing prices and insurers are often declining to offer protection to people with more severe mental health conditions.
Call for action
In response to the findings, the charity is asking the FCA to investigate these claims and highlight if clients with mental health problems are being unfairly penalised.
It added that the FCA should also 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.
Money and Mental Health is also urging insurance providers to be more transparent about how decisions are made about customers with mental health problems.
It said that firms should ensure that these decisions are based on up-to-date data which reflects the fact that people can manage and recover from mental health problems.
Helen Undy, chief executive of the Money and Mental Health Policy Institute, said: “The insurance industry sells peace of mind, but that’s not on offer for many people with mental health problems, who may arguably need it most. Across many types of insurance, people with mental health problems are facing really poor outcomes.
“It’s hard to believe that these extortionate premiums accurately reflect the risk to insurers, especially when people who have been able to manage their condition for years are still being charged significantly more.
“There is a real sense among people with mental health problems that they’re not being treated fairly – many even say they feel discriminated against by insurers. Not only is that causing unnecessary distress, it is also leaving people more exposed to the risk of financial harm during a cost of living crisis.
“These insurance firms are still making their pricing decisions behind locked doors – in a way that is almost impossible for researchers, consumers or even politicians to hold to account. It’s about time that the regulator took decisive action to show that protecting their commercial interests does not put firms above the law.”
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.”