A radical overhaul of travel insurance is needed to give people with mental health problems better access to cover, a report urges.
The Money and Mental Health Policy Institute, a charity set up by consumer champion Martin Lewis, said high premiums and limited access to cover leave many people with mental health issues struggling to find suitable travel insurance policies.
It is calling for the Financial Conduct Authority (FCA) to review the fairness of travel insurance pricing for people with mental health problems, including asking firms to demonstrate that their pricing complies with the Equality Act 2010.
A survey of over 2,000 people by the Money and Mental Health Policy Institute found nearly half (45%) of people with mental health problems never disclose their illness to their travel insurer, potentially invalidating any insurance they may take out.
This compares with just 6% of those with physical health problems who do not tell their insurer.
The report said 43% of people who have experienced mental health problems and tried to buy travel insurance in the last five years think that the price is unfair or very unfair, and more than one in 10 (13%) have travelled without insurance because it was too expensive.
A mystery shopping exercise by the charity also found several insurers hiked premiums by over 400% for people who disclosed mental health problems that have been stable and effectively managed for a very long time, with some insurers still declining to offer cover.
It found premiums shot up by between 500% and 2,000% for those who disclosed more severe mental health problems.
The report also found several providers require customers to call up to complete an application, after disclosing some details about their mental health online.
However, some people described feeling embarrassed or ashamed when disclosing information about their mental health, and some felt as if they were being punished or judged for being unwell.
The charity's director, Helen Undy, said: "Half of us will experience a mental health problem at some point in our lives, which could have a long-term impact on our access to insurance.
"If the mainstream travel insurance market doesn't work for half of customers, then it's really not working at all."
She continued: "Given the high prices that many people with mental health problems face, and the harm they experience as a result, it's time the regulator took a closer look."
A spokeswoman for the Association of British Insurers (ABI) said: "Travel insurance is widely available for people with a range of long-term and serious conditions, including mental health conditions.
"As with pre-existing physical conditions, some insurers may consider them a risk factor and this can push up premiums because of the potentially high cost of treatment that is needed overseas.
"The insurance market is extremely competitive and this gives people the opportunity to shop around to find the insurer which is most able to take their personal circumstances into account and offer the most appropriate cover.
"We're already working with the FCA and other industry and consumer bodies on how to improve sign-posting for customers with pre-existing medical conditions."
A spokesman for the FCA said: "We are aware of the challenges people find when trying to access specialist travel insurance at a reasonable cost. This is why we have looked closely at this area to see what could make it easier for people to find the right policy.
"During our research we found there is a significant market of specialist travel insurance providers who may be more cost effective, but these can be difficult for people to find.
"We are working with insurance firms and charities to help provide better information which can act as signposts so that people can get access to polices more suitable for their specific needs and at more a competitive rate. This will help to make sure that the market works better for people with pre-existing medical conditions."
Here are some tips from the ABI for people with pre-existing medical conditions to bear in mind when looking for travel insurance:
- Where a higher premium is charged, it could be because, based on the information available to the insurer, the customer is more likely to need medical treatment while they are away, and/or that treatment is more likely to be expensive. Health is not the only factor affecting travel insurance premiums - the destination and type of holiday can also make a difference.
- Shop around. As well as going online you could call some insurers direct to discuss your individual circumstances.
- There are specialist insurers who are more experienced in covering people with medical conditions so make sure you seek them out, either directly or with the help of a specialist broker.
- Some types of holiday can be more expensive to cover, for example cover for cruises can be more expensive because of the difficulty of transporting patients to hospital.
- Holding information back from your insurer could leave you without the cover you need if you do fall ill.
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