There has been a lot of research done on how different client segments are served by the financial services industry.
And LGBT+ people are among those who are the most poorly served.
Lesbian, gay, bisexual and transgender+ (LGBT+) customers claim to have been treated differently by the insurance and protection sectors; either because of their sexuality or their gender identity, according to a 2015 YouGov survey conducted on behalf of insurer Emerald Life – which specialises in cover for LGBT+ people.
Among the bad experiences reported, one respondent said they had been “given higher premiums for being bisexual”.
Another highlighted “intrusive lifestyle questionnaires”, while others flagged issues of misgendering – such as calling a trans woman ‘sir’ or ‘Mr’; or assumptions that clients are in an opposite-sex relationship.
“If you are LGBT+ you are very poorly served in the market; and if you’re poorly served, people simply don’t engage with the financial services sector and buy products,” Steven Wardlaw, chairman at Emerald Life, told International Adviser.
Need to catch up
“If you are LGBT+, you are 50% more likely to have no insurance at all,” he added.
And that is driven by the perception that insurance is more expensive, they won’t find a suitable product or feel their claims won’t be paid.
“From that same survey, half of the heterosexual sample thought that LGBT+ customers had a much worse experience because they were LGBT+.”
Wardlaw thinks this is because of the way the industry works.
“For the longest time, the products have been designed for white, straight men who are going to have wives at home, [and send their kids] to private schools.
“A lot of the protection and sales journey is designed on the presumption that [clients are] married and have children, and that is obviously something that doesn’t work for a lot of people.
“The biggest issue is that the financial services sector hasn’t kept up with the times; even now the insurance and protection sectors are going to be 30-40 years behind,” Wardlaw added.
Doing things differently
He told IA that products focussing on white, married, opposite-sex couples with children only cover 18% of the current UK population – the segment that identifies as such – leaving a significant proportion of the client base largely uncovered by such policies.
Wardlaw said that when Emerald Life was set up, it addressed three main issues affecting LGBT+ clients.
- Imagery – because if people cannot see or recognise themselves in the firm or the products offered, they simply won’t engage.
- The journey – which entails making no assumptions on the person’s gender or sexuality and the same applied to their potential partner as well.
- The policies themselves had to be changed and adapted to the segment Emerald Life was looking to attract and serve.
“We have included extra protection when you travel; we included discrimination cover for free, and we allow people to bring claims if they were bullied on social media,” he added.
But it doesn’t stop there either.
“We made sure that the definition of family included adopted, fostered and surrogate children, because in the LGBT+ community a lot of families are created simply differently,” Wardlaw said.
Unwilling to change
But the industry is still too conservative to take the steps needed to deliver better experiences for LGBT+ clients, he added.
“The problem is, without diversity in leadership, and without diversity in people who are designing products, you’re never going to get this right.
“Underwriters are amazingly conservative; and if you say to them, ‘we’d like to place a critical illness cover for someone who has HIV’, they say we don’t have the data.”
Wardlaw believes that the industry has turned a blind eye towards LGBT+ customers.
For example, while policies and designs have been changed to fully fit people affected by type-two diabetes, this has not happened for customers with HIV.
Despite medical advances, and the fact that HIV+ people on medication can live a healthy life and not pass on the virus, things have not changed for a long time.
Wardlaw said: “Critical illness still has wording that says they will pay out if you contract HIV but only through assault, work or blood transfusion.
“So, the wording that we have from the 1980s is still there, despite the fact that the [Association of British Insurers (ABI)] can produce a new model wording.”
Emerald Life worked with the ABI and the wording in critical illness policies has actually been amended and it has been available for about a year now.
Firms were supposed to adopt it by February 2019, but not much has changed, Wardlaw said.
“There isn’t a product, currently, that recognises the change of prognosis for people with HIV.”
Empathy won’t change the system
While there may be sympathetic insurers or brokers out there, that doesn’t necessarily mean things are going to change, he added.
“If you’re an LGBT+ customer you don’t pay more, but you are paying the same for a product that covers less and is more difficult.”
Things don’t get any easier for transgender clients either.
Because when disclosing any pre-existing medical conditions to an insurer, what are they supposed to say?
Wardlaw claims insurers have no answer to that question.
“We need to price risk correctly,” he added, “and if you don’t understand risk, you’re never going to price it correctly.
“Nobody in the insurance sector really seems to have the drive or the momentum to change that at the moment.”
Is incomplete cover better than no cover?
Although Emerald Life worked with the ABI on the amended policy wording to include LGBT+ journeys, the situation has not really improved.
“Critical illness insurers now have an ABI-approved wording on the shelf, it’s ready.
“There will be a cost for policy changing – it’s not free to do – but the fact that they could basically take that wording off the shelf and implement it, but they haven’t, I think shows there’s a long way to go for us.”
And industry reaction hasn’t helped either; considering most claim that, since LGBT+ customers are not prevented from buying insurance, they don’t recognise a gap in the market in terms of cover and suitability, Wardlaw added.
“While there is interest from individuals in the bigger insurers on what we do, nothing seems to change.”
But Wardlaw believes that the lack of LGBT+ representation across the insurance sector means that changes Emeral Life has made to its definitions of surrogacy, discrimination and gender neutral journeys have not really been adopted by other players in the market.
