Older travellers are penalised by insurers

The irony is rarely lost on new retirees, that just as they have the time and money to travel, their insurance premiums go through the roof.

Travel insurance is fairly inexpensive for the young and healthy. But once you get past your mid 50s, premiums start to increase much faster, doubling by the time you reach your early 70s.

There is of course some reason behind this. As travelers get older, they are more likely to claim on their insurance. And the size of their claims is also, on average, larger. As you can see from the graph below (supplied by the ABI) the average claim that someone makes in their 70s is three times higher than the average claim of a fortysomething.

However, interestingly, for those who are still travelling by their late 70s and early 80s, both the frequency and average size of claims starts to fall again - before leaping again once they reach their late 80s.

This improvement in the sums for insurance companies is not, however, reflected in their pricing. Once you reach your mid 70s, premiums continue to rise, even though claims levels for insurers are falling. In the graph above, this is illustrated clearly as the turquoise premiums line breaks away from the purple claims frequency line.

To me, this suggests that by the time insurance companies have got you used to paying much more for your travel insurance in your 60s and early 70s, they have an open door to continue ratcheting up premiums in your late 70s.

Part of the problem here is that the travel insurance market is not nearly as competitive as it should be for older travelers and those with pre-existing medical conditions. Once you get past the age of 75, many insurers simply won't sell you a policy. Although insurers have to signpost you to a company who will take your business, this is not necessarily a company that will offer you a competitive price.

The impact is compounded by the fact that elder travelers are less likely to use the internet to shop around for travel insurance. But even those who do find that the options on comparison sites are limited. A search for annual travel insurance policy for an 84 year old man on Gocompare brings back quotes from 2 brands - Saga offering a policy for £560, and Goodtogoinsurance.com offering quotes of around £1800 and £2200 for two different levels of cover.

If you're caught in this trap, it can be well worth using a broker to help you get a better price. The industry trade body, BIBA, will help you find one in your local area.

Only if customers demand a better deal will the indusrtry deliver it. At the moment, many elderly travelers are paying more than they should have to.