Memorandum from the Association of British
Insurers (DDB 65)
I am writing to provide the views of the Association
of British Insurers (ABI) in response to calls for written evidence
from the Joint Committee on the draft Disability Discrimination
Bill. ABI represents over 400 insurance companies who between
them account for around 96% of the worldwide business of insurance
companies.
ABI is extremely mindful of insurers' obligations
under disability discrimination legislation. The latest version
of our practical guidance for members (January 2003) is available
on our website at:
http://www.abi.org.uk/Display/File/364/DisabilityGuide2.pdf
Our comments are confined to Clause 2 "Group
Insurance". Whilst it is right that insurers should be held
accountable for any discriminatory decisions they make, they should
not be held responsible for decisions taken by the employer, or
indeed an independent financial adviser, which are wholly beyond
the insurer's control. This principle was recognised by the DRTF
in their report "From Exclusion to Inclusion" (January
2000) and also by the DWP in draft legislation on disability intended
to implement the Employment Directive (prior to the DWP concluding
that insurance was outside the scope of the Directive. The Explanatory
Notes (paragraph 18) draw the distinction between discriminatory
acts committed by the employer and those committed by the insurer.
The Explanatory Notes (paragraph 18) also state
that ". . . Section 18 is unnecessary and confusing".
Whilst the intention of the new legislation is to make it clear
that insurers are to be regarded as "providers of services",
and thereby liable for discriminatory acts, the use of the phrase
". . . provision of facilities by way of insurance"
in Clause 2 could in itself cause confusion. Whilst the section
18 wording which refers to ". . . insurance services provided
by the insurer" requires a contract of insurance which benefits
the employee directly, the reference to "facilities"
in new Clause 2 implies that it might be interpreted as contracts
under which the employee has an indirect benefit of the cover.
Against this, however, ". . . facilities by way of insurance
to the employer's employees" could not really be described
as the provision of insurance, in any manner, to the employees
who are members of an employer group life or income protection
scheme, as the members only have rights against the employer under
their contract of employment which may not be replicated under
the insurance contract taken out by the employer.
Furthermore, what would be the position in relation
to voluntary schemes? Here, the employer takes out the policy
in its own name but the cover is paid for by the employees who
join, usually through deduction from pay by the employer, who
then pays it across in bulk to the insurer. If the contract is
a group life policy, benefit would normally be paid to the employer
as the trustee, so the employer is the direct beneficiary. For
critical illness policies, payment would be made to the employee
as a direct beneficiary.
We suggest that, if inconsistent interpretations
are to be avoided, Clause 2 needs to be amended so as to make
it explicit which arrangements fall within the scope of the Bill.
February 2004
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