Memorandum submitted by Saga Group Ltd (E 34)
Saga built its highly successful British business on niche marketing and exclusively serving the needs of the people aged 50 and over. Last year we provided a range of services to some 2.7 million people. Our robust and highly popular brand is based on trust, quality, dependability and value for older people. We focus on understanding and then designing bespoke services to meet the changing needs and demands of our target market of people aged 50+ in the UK, a demographic group comprising about half the electorate and forecast to grow from 21 million today to 25 million by 2020. We do not design and market products and services to other age groups.
Saga welcomes the principle behind the Equality Bill. We support measures to combat unfair discrimination that denies people the ability to live life to the full. However, the Bill as it stands risks negatively affecting our customers' ability to buy the holidays they want and the financial and other services they need at a competitive price. For example:
· Our insurance business, if forced to offer premiums to all age groups, would become less competitive for the over 50s because we would have to bear extra costs of quotation for the under 50s;
· Understanding older savers means we can offer better terms. Government itself now intends to treat older savers differently - in particular over ISAs, as proposed in the Budget - so bringing Government policy into line with what Saga offers;
· Our holiday business currently serves only the over 50s and the popularity and enjoyment of our holidays depends, in part, on being exclusive for the over 50s rather than open to all age groups;
· Specialist advice services for Long Term Care funding and other services such as Saga Independent Living, which offers home care services, provide relevant and targeted training for staff that concentrates on the particular needs of elderly clients - e.g. special dementia training. We could not offer the service to all age groups without impairing the bespoke and tailored service we have developed.
Research (see below) suggests that people are happy for there to be special offers and products tailored for particular age groups such as discounted tickets for cinema or leisure facilities, cheap days at DIY stores, concessionary rates for hairdressing etc. Senior citizens are likely to be distressed at the removal of these benefits. They are currently widespread. For instance, the website: http://www.seniorcashback.co.uk lists 1,462 retailers prepared to offer cashback to those over 50. Vacationstogo.co.uk lists Azamara, Celebrity, Carnival, Norwegian, MSC Cruises and Royal Caribbean as cruiselines offering special discounts for the over 55s. Desk research shows the following hotel chains offering senior discounts:
Government itself follows this thinking through the enhanced ISA allowances in the 2009 Budget confined to the over 50 year olds; public transport travel concessions such as the national free bus pass and the older persons' railcard (and indeed the young persons' railcard). We want all these to be protected in future.
We told the Government in consultation: "Robust, compelling evidence of negative experience of discrimination should inform any legislation on equality so as to avoid unforeseen consequences." Common sense suggests that a Bill meant to improve the lot of older people should not start by removing concessions or tailored services available to them. The Government response in a Green Paper, "Framework for Fairness" set out three tests to any legislation on age discrimination:
* "It must be a proportionate response to a real problem and not create unnecessary burdens on the private, public or voluntary sectors;
• "It must not have the unintended consequence of prohibiting positive benefits for either younger or older people, such as youth clubs or clubs for older people, holidays catering for people of particular ages, or concessions and discounts which help younger or older people" and
• "It must pass a "common sense" test."
The Green Paper sensibly accepted the desirability of niche marketing: "There will always be a need for age-specific facilities and services." As we had urged, the Green Paper targeted only discrimination which is harmful: "It might instead be more appropriate to work with relevant sectors to agree specific measures to deal with any areas of concern." We were pleased that at that stage the Government "probably" wanted to allow to continue:
· "Age based concessions, whether in the private or public sector";
· "Insurance companies to design and provide products for specific market segments (for example, younger or older drivers)"; and,
· "Age limits on group holidays."
We cannot understand why these suggested exemptions are not written into the Bill. If they are not written into the face of the Bill upon the commencement day of the Act discounts and services confined to the over 50s will become illegal. Assurances about the possible content of some secondary legislation promised at some vague point in the future would not be enough to preserve Saga's financial services and holidays as they are known and trusted by millions of satisfied customers.
PROBLEMS FOR OUR
96% of Saga Holidays
customers rate us 'good to excellent'. Our products are carefully designed to
meet the specific needs of the over 50s. This is reflected in the very high
rates of repeat business, and by a plethora of awards for Saga's customer
service. Our holidays are open to spouses, partners and companions who are
under 50, but over 40. The fact that Saga operates over 50s cruises does not prevent
those from under 50 going on a cruise; the fact that we own and operate a hotel
Research available to us indicates that 71% of our customers think that having to open up our holidays to all age groups would maker it less likely or much less likely that they would rebook with us; 61% think it would make their holiday experience worse or much worse.
The exception foreshadowed in the Green Paper for age based holidays has not made it to the face of the Bill. Clause 190 of the Bill provides for a Minister to make exceptions by age by the process of secondary legislation. The Explanatory Notes mention that this may include "holidays for particular age groups."
If this is not written on the face of the Bill - or in the absence at very least of a Government undertaking to do so - it will make business planning difficult for us since we do not know whether our holidays will remain legal; nor do we have any indication about the date of such protective secondary legislation - or even if the Government will remain committed to the principle of this exception.
PROBLEMS FOR OUR INSURANCE AND SAVINGS CUSTOMERS
A recent independent IPSOS MORI put Saga first for treating customers fairly and at 91% our customers gave us the second highest satisfaction score (just one point behind M&S customers).
We offer consistent and favourable rates for older savers. This year we estimate that because we exclusively serve the over 50s we have been able to pass on an extra £20m to our savings customers. Being forced to abandon our exclusive focus on older people would put this at risk.
For insurance we offer
favourable premiums to older people, and build in tailored features based on
our understanding of their needs and desires. If we had to cater for age groups
under 50, and price risks less pertinent to those of older age groups then the
structure on which we have built our business will alter markedly. The
Some campaigners think that all insurers, even those with a specialism in a niche, should be obliged to offer quotes for all, in the belief this will improve access to insurance cover. This is misguided. Insurers will raise premiums for risks that they are unsure about but may be forced to take on; the additional costs of providing quotes will fall on all customers, to the detriment of all consumers.
There has been some concern that older people find it hard to get travel and motor insurance. Research commissioned by Saga showed that 99% of older customers are already able to find motor insurance and more than 98% are able to find travel insurance. This data was supplied to the Treasury and is quoted in the Final Report of the Experts Working Group: "Age Discrimination in Financial Services" (para. 2.6, October 2008) (see below).
The actual problem is
not immense, although the perception of it is bigger. In any event, Saga is part of the solution not
part of the problem, because Saga does not apply upper age limits to its
policies. Indeed, we have experience of insuring many drivers aged over 100 and
the oldest lady taking our travel insurance went to
Legislating to restrict insurers' use of age or to force them to quote to target markets they do not currently serve is not the answer to any perceived problem. It could lead to many unintended consequences to the detriment of all customers, including the very people we are trying to help: discouraging competition if insurers remove products because of increased costs of quoting; discouraging innovation if niche marketing to the needs of particular age groups is undermined by universal obligations to quote; discouraging diversity of product features if insurers have to offer a standardized product regardless of age; and, higher prices for all as a result of having to acquire full data sets for all ages.
Provided there is adequate competition in supplying insurance products and no real evidence of significant market failure we believe that insurance companies should be exempted from having to market to certain age groups which they do not have the knowledge or desire to serve. Although the Bill virtually bulges with common sense exceptions to the general provisions against discrimination there is no such exemption on the face of the Bill as prefigured in the Green Paper, and there is no indication that the Clause 190 powers will be used to provide one under secondary legislation.
The Green Paper proposed an exemption for "Insurance companies to design and provide products for specific market segments (for example, younger or older drivers)"; and this should be reinstated on the face of the Bill.
SURVEY EVIDENCE PRESENTED TO GOVERNMENT
Populus online survey of 10,613 adults over 50: August 2008
Some older people say they find it difficult to find insurance, while others say they have no problems at all. Have you ever been refused insurance because of your age?
Motor Insurance: Yes 1%
Travel Insurance: Yes 10%
Were you able to find another insurer who would cover you? [Those refused]
i.e. 99% of older customers were able to find motor insurance and more than 98% are able to find travel insurance
Survey of 500 Saga travel customers
> 78% prefer to go on holiday with others aged 50 and over
> 97% do not object to holiday companies that offer holidays for particular age groups
BMRB survey of 2,004 adults
> 93% do not object to goods and services being offered at a discount to people of a particular age
> 57% think that it would be a bad thing if legislation made it illegal to offer holidays confined to a certain age group. Only 9% thought it would be a good thing
> 60% thought it would be a bad thing if legislation made it illegal to offer discounts on goods and services to people on the basis of their age. Only 13% thought it would be a good thing
Populus online survey of 14,809 adults over 50: Dec 2006
> 84% agreed that discounts on products should be offered to specific age groups
> 86% feel it acceptable to sell products such as holidays and car insurance that are confined to specific age groups.
Interview of 100 Saga holiday customers: 2009
If Saga had to sell holidays to people aged 18 and over, would this make you more or less likely to book a holiday with Saga?
Much more likely - 1%
More likely - 1%
No difference - 27%
Less likely - 32%
Much less likely - 39%
If people aged 18 and over traveled on Saga holidays, in general terms, how do you think this might affect your overall holiday experience? Is it likely to make the experience:
Much better - 2%
Better - 3%
No difference - 34%
Worse - 44%
Much worse - 17%