Association of British Insurers (ABI) Code of Practice guides

The Association of British Insurers (ABI) sets out the general principles and exceptions relating to insurance from the Disability Discrimination Act (see the end of this factsheet for contact details). In general, an insurance company must be fair and reasonable in its dealings with disabled people (including people with mental health problems) and must account for any difference in treatment between disabled and non-disabled people. Insurers' decisions must be based on information relevant to the assessment of the risk to be insured and from a reliable source.

These may include:

• actuarial or statistical data
• medical research information
• a medical report, or
• opinion on an individual from a reliable source.

Insurers must make sure that the information is accurate and that their use of it is reasonable. It must be shown that the disabled person has a higher risk; if not, there should be no differentiation in their treatment. Again, if you believe that your insurer has acted unfairly, you may wish to seek legal advice (see 'Complaints' and 'Legal redress' sections of this factsheet).

Different types of insurance

This section covers different types of insurance. It sets out instances where insurers still justify discrimination despite the existence of the Disability Discrimination Act. It is not a statement of the law and so if you are unsure about whether or not you have been treated unjustly by your insurer, you should consider seeking legal advice or taking up a complaint with the Financial Services Ombudsman (see 'Complaints' and 'Useful contacts' sections of this factsheet).

Private health insurance

Despite the existence of the Disability Discrimination Act, special exemptions can still apply to private health insurance. Insurers can refuse cover for conditions and illnesses which exist at the time the insurance contract is taken out (called pre-existing conditions). They may also include an 'exclusion clause' which means that they will not provide cover for the first years of a policy if the person has experienced a serious condition before the start of the policy. Refusal to provide cover must be based on objective evidence that the person's recent medical history increases the risk of them making a claim.

Proof of an additional risk may be based on claims information, government statistics, medical research or industry sources. Health insurers may also request a medical report on an individual. There must be reasonable grounds for a decision to refuse cover, for instance, evidence that the person's pre-existing medical condition is likely to increase risk. However, the decision must be based on the person's health condition and not just because the person is disabled. Private health insurers tend to exclude people with a pre-existing condition. If existing members develop a mental condition, such as schizophrenia or bi-polar disorder (manic depression), hospital treatment is generally limited to a specific timescale and outpatient treatment is limited to a maximum ceiling. Specific terms may be related to the severity, stabilisation and likelihood of recurrence, but there is a measure of discretion in individual circumstances.

Travel insurance

A travel insurer cannot refuse a travel policy to a disabled person, which includes a person with mental health problems. However, claims arising out of the disability may be excluded if the insurer can justify that the condition represents an increased risk. A travel insurer may also exclude cover in relation to a medical condition existing before or at the time the contract is made. This means that if you have a pre-existing condition of, say, schizophrenia, and you experience symptoms whilst you are on holiday, your insurer may refuse you cover for treatment of this particular condition. If the claim is not connected to the disability it should be paid as normal.

If a person who has experienced mental health problems takes out a travel insurance policy, they are offered the standard policies available from travel agents (which almost always exclude pre-existing conditions, including mental health problems), or a specialist policy which gives full cover but costs far more money. If you have a mental health problem (or have experienced mental health problems in the past) be aware that holidays are often sold with standard insurance policies which have exclusions in the small print. These policies are more or less useless if you then try to take out a claim for anything which might be connected to your mental health problem (or any other pre-existing condition) whilst you where away on holiday.

Life insurance

If life insurance cover is refused or premiums are increased, the insurer would need to show that the disability or medical condition would directly affect life expectancy. In cases of 'severe mental health problems' (such as schizophrenia), the insurer could argue that this diagnosis increases the risk of suicide.

The Ivan Massow Group specialises in life insurance for people with mental health problems. See the 'Useful contacts' section in this factsheet for information about how to contact the company, and the 'Recent initiatives' section for details of their services.