Orders of the Day — Insurance (Racial Discrimination)

– in the House of Commons at 12:00 am on 17 January 1967.

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Motion made, and Question proposed, That this House do now adjourn.—[Mr.Bishop.]

9.43 a.m.

Photo of Mr David Marquand Mr David Marquand , Ashfield

I am very grateful to have the opportunity to raise the question of racial discrimination in the field of insurance, even at this hour of the morning. And if I may say so, I am even more grateful to my hon. Friend who has been here all through the night in order to have the pleasure of replying.

This is an extremely important subject, for the following reasons. The Government have laid it down on many occasions that their policy is to aid the speediest possible absorption of coloured immigrants from the Commonwealth into the social and cultural life of the country, and to oppose any form of racial discrimination against them. This policy is all the more important since the nature of the problem is changing. It is no longer primarily a question—or in the fairly near future will no longer be primarily a question—of how to absorb Commonwealth immigrants, but one of how to ensure that coloured Englishmen, born in this country, are not discriminated against because of the colour of their skin.

I believe that since this general policy of opposition to any form of racial discrimination is accepted by the Government, it follows that if there appears to be prima facie evidence of discrimination in any important area of social life, the Government have a clear obligation at the very least to make certain whether the prima facie evidence is true, and, if it is true and is valid, to take some action on it.

I further assert that this is particularly true of the general field of insurance and in particular two aspects of insurance—life assurance and motor insurance. It is undeniable that accessibility to life assurance on fair terms is a prerequisite of a full and secure family life in an advanced society like ours. Also, it is in many cases a precondition of professional employment of various kinds.

I suggest that in the matter of motor insurance the obligation on the Government to make certain that there is no form of discrimination is being carried out is even clearer. One cannot legally drive a car unless it is insured. One is not allowed to own a car unless one insures it. These are legal obligations. Thus, in a the field of motor insurance the insurance companies are in a sense acting as agents of the State. In this sphere, above all, therefore, it seems to me that the Government have a duty to see to it that the insurance companies are acting in conformity with public policy and at the very least to inquire into the facts if the evidence appears to suggest that they are not doing so.

In my view, there is clear prima facie evidence which suggests that in the matter of life insurance and of motor insurance the insurance companies are not now acting in conformity with public policy and that—not necessarily by design, but, nevertheless, in practice—the policies which they carry out amount to racial discrimination against a portion of the citizens of this country.

I say that there is prima facie evidence of this. I therefore urge the Government to make a full investigation of the situation. What is the nature of the evidence? For obvious reasons it is extremely hard to come by any hard and fast statistical evidence. Customers of insurance companies do not know what happens to other customers, and, therefore, they do not know if they are being discriminated against. Insurance companies themselves are quite extraordinarily coy about what their policies and practices are. On the whole, they do not publish the facts. They insist that they do not carry out discriminatory policies, but they refuse to reveal the basis on which they assess risks and calculate premiums. But this does not diminish the need for inquiry. It strengthens it.

A further point is that in the field of insurance the position of the law at the moment seems rather peculiar. The leading case on this subject is that of Horne v. Poland, decided in the High Court, in 1922. The judgment in that case appears to mean that the courts enjoin discrimination, or what would now be considered to be discrimination, on the part of insurance companies. The judge in that case ruled as follows, "It is impossible to say that matters such as nationality, caste and early domicile cannot be of importance in judging as to the risk that underwriters run in entering into such a contract—that is to say, that there are racial or national differences as regards training, education and the other matters than I have mentioned."

This view, that racial differences, or differences of national origin, are relevant in a field like this has, of course, no scientific validity whatever. It would not be accepted for a moment by any anthropologist, psychologist or physiologist. It may have been plausible in 1922, but certainly not today. However, as far as I can make out, that is still the leading case. Therefore, there is good reason to suppose that insurance companies may well be carrying out their policies in conformity with it.

I turn to the evidence which has come my way about the experience of customers of insurance companies concerning the premiums charged, and also the employment policies followed by insurance companies. Here are some examples of complaints which have been made to the Campaign Against Racial Discrimination by customers of insurance companies who allege that they have been discriminated against.

A Jamaican teacher of music was given a comprehensive insurance for her car on arrival in this country, provided that she was the sole driver. After three years' no-claim bonus, she applied for a fully comprehensive policy with no stipulation about the driver. In the branch office she was told that this was acceptable, but when the head office heard that she was Jamaican they refused the policy.

An Indian white-collared worker was told in the office of one of the large motoring organisations that any insurance cover it could find for him would have to be 50 per cent. in excess of normal premiums. He asked why that was so and was told that it was because of driving on the right-hand side of the road in India. He pointed that he was a Kenyan Indian and that he drove on the left-hand side of the road at home. The officer of the organisation replied that that was immaterial and that all immigrants had to have increased premiums. He said, "If you don't like it, there is the door."

An Indian office worker had been unable to find an insurance company which did not increase the premium on his car, which did not increase the initial amount which a customer would have to pay if there was an accident, and which would give him comprehensive cover. Only one would give a reason for that behaviour; the official said that it was a matter of "national temperament", not colour, which made immigrants a poor risk. He admitted that all immigrants, regardless of race, were discriminated against equally. Those are just a few random examples. But as I said, they cannot, in the nature of the case, be anything more than that.

Here is a different example, applying to employment policy: about a year ago, the Campaign Against Racial Discrimination sent letters to 26 insurance companies from two mythical school leavers, an Englishman and a West Indian who had spent his whole life in Britain. Each wanted a clerical job. The letters were virtually identical except that the West Indian was slightly better educated. More than half the insurance companies offered the supposed Englishman an interview. Only one offered the West Indian an interview.

In addition to these examples, I carried out a very amateur experiment in social research myself yesterday. I rang up four motor insurance companies to find out what premiums would be charged for an Englishman of 30 with three years' driving experience in a professional job, as against an Indian of 30 with six years' driving experience in the same kind of job. All four companies were able to quote premiums over the 'phone for the Englishman—identical premiums.

In the case of the Indian, one company said that it could only give insurance for the Indian himself and named drivers. One company said bluntly that no premiums could be quoted over the 'phone, even though it had done so for the Englishman. Only one of the four offered the Indian the same premium on the same terms which they had quoted for the Englishman.

The insurance companies themselves deny passionately and vehemently that they practise any kind of discrimination on racial grounds. They claim that their policy is based on actuarial risk only. However, they refuse to state the statistical basis on which they calculate the actuarial risk. Recently, the National Council for Civil Liberties carried out an investigation of insurance companies, writing to virtually every insurance company in the country asking what their policies were in this field. Some of the replies are indicative of attitudes which suggest that discrimination is being carried out.

The Pearl Assurance Company says: this company, in writing all classes of business, follows the wellknown underwriting principle of considering every case on its merits. But it gives no evidence of how it decides what the merits are.

The Provincial Insurance Company says: It is true that on average 'coloured' persons are asked to pay more for insurance than the average British national; not because we object to colour…but because at the present stage of integration of the coloured people into the United Kingdom…they are on average…substantially inferior risks compared to the average British national…people who have not been in this country for several years immediately before proposing for motor insurance are suspect' motor risks, because they have not had sufficient time to become accustomed to the conditons which obtain here…On this score 'coloured' people are at a disadvantage because by and large they come from the less sophisticated countries. But this cannot, of course, be true of coloured people who have been in this country for a long time, and still less to coloured people born in this country.

The Provincial Insurance Company says: temperament is also a factor. 'Coloured' people tend to be light-hearted, extrovert and gregarious. Whilst these are excellent characteristics from many points of view, they are not conducive to being good motor risks. I should like to get the advice of a statistically-trained social anthropologist on that kind of arguing.

The Legal and General says: the suggestion that discriminatory rates are applied for insurance risks where 'coloured' people are concerned is not uncommon but has no foundation in fact. It usually arises because newly arrived immigrants discover native born Englishmen who pay lower motor premiums than themselves and draw the erroneous conclusion that this is because they are of different race or colour.The self-evident fact, of course, is that any driver who has little or no experience of driving conditions in this country must expect to pay appropriate rates until he has a proven record of safe driving on British roads. The National Council for Civil Liberties asked how long an immigrant would have to stay in this country before he could be considered to have a proven record of safe driving on British roads. The company wrote in reply that Duration of residence' has of itself no significance whatsoever. That sounds a rather odd statement, in view of what it had said only shortly before.

It is also worth pointing out that the problem is not just one of racial discrimination. There are good grounds for believing that the methods which insurance companies employ to calculate risks and decide on sizes of premiums are suspect anyway.

Some time 'ago the insurance companies of this country employed an American management consultant firm called McKinsey to inquire into their structure, methods, policy and so on. The McKinsey Report was produced in 1965. The insurance companies have steadily refused to publish it. All that one can go on is what appeared in the Press about it. It seems clear that the McKinsey Report criticised very caustically the arbitrary, unscientific and basically irrelevant methods which the British insurance companies employed to calculate risks.

What are the implications of all this? I am not trying to argue that everyone should pay the same premium—obviously not. The size of the premium must be calculated on the basis of risk. But I do say that the calculation of risk should be based on scientifically valid and statistically verified grounds. It is reasonable to say that a man who gets into an accident every six months should pay more. It is not reasonable to say that a man should pay more because he is coloured and because the insurance companies have a vague hunch that coloured people present higher risks.

If the insurance companies do possess statistical data of a reliable kind which would show that coloured people present higher risks, let them produce it. But they have not produced it and there is no suggestion of any kind of statistical evidence in all the letters sent to the

National Council. To my mind, this suggests that the insurance companies have not got such evidence, and this is not surprising, because I do not believe that any really reliable statistical data of this kind could exist anyway.

It is not enough simply to show that more coloured drivers get into accidents or have claims than white drivers. It would be necessary to show that this was true social class by social class, age by age, occupation by occupation. That is an elementary principle of statistical inference. One has to compare like with like. It is not enough simply to compare the whole group of coloured people in this country with the whole white population. There may be other relevant differences between the two populations.

There is no evidence that the insurance companies have carried out any investigations remotely of this kind. This is why I suggest to my right hon. Friend —I urge him—that he should be prepared to carry out a thorough investigation into the whole matter. It is clear that the insurance companies, particularly in motor insurance, are agents of the State and this means that there is an obligation both on them and the Government to carry out public policy. I ask my hon. Friend at least to throw some light into this rather dark and dubious corner.

10.3 a.m.

Photo of Mr George Darling Mr George Darling , Sheffield, Hillsborough

My hon. Friend the Member for Ashfield (Mr. Marquand) has made some allegations about the practice of insurance companies and has used, for example, a phrase like "this dubious corner" of, I suppose, a trading practice. We will certainly examine any case which he brings forward about prima facie evidence of racial discrimination and colour prejudice in the insurance business.

I must make it clear that the Government stand firmly against racial discrimination and colour prepudice and will take whatever steps are needed when evidence of it comes to light to see that it is stamped out. But I must also make it clear where the responsibilities of the Board of Trade lie in this matter.

The Board of Trade is responsible for the supervision of the insurance business with a view to protecting the interests of the public, generally and in the main for the avoidance of insolvencies. The Board's powers in this connection are being very much strengthened in the Companies Bill now before Parliament. But the Board has no power to require insurers to accept particular risks or to control the terms of policies, and we are not proposing to take such powers.

Considering the size of the whole range of insurance, it would be quite impossible for the Board of Trade, day by day, to instruct insurance companies about the risks which they ought to underwrite, the risks which they should insure and the terms on which those risks should be covered. What we can do, by public pressure, by whatever means are available to us, legislative and otherwise, is to see that the insurance business is carried out in such a way that the granting of differential terms is not in any way based on racial discrimination or colour prejudice.

Surely, the situation is that we are asking for equality of treatment for the same kinds of insurance risk, as my hon. Friend said. My hon. Friend will agree that in certain circumstances discrimination among policy holders is a necessary and even a desirable feature of insurance practice. If there were not such discrimination, the bad risks would be subsidised by the good risks. It is common, of course, for more favourable treatment to be given to good risks. This is clearly seen in the "no claims" discount for motor car drivers.

I do not want, at this time of the day, to get involved in discussing how the insurance companies should arrange their business so that any question of racial discrimination or prejudice is completely banished from their operations, but where, in the past, in giving instructions about the risks which they are prepared to underwrite, insurance companies have given an indication that there is some difference, some prejudice against coloured immigrants, that is to be deprecated.

As far back as 1961 both the British Insurance Association and the Accident Offices Association urged their members to remove from their underwriting guides anything which could be interpreted as calling for a racial discrimination. We shall certainly examine any cases which come along, but, so far as I know, the insurance companies which belong to those two main associations are carrying out that policy which was laid down in 1961.

It is perfectly true that some companies and underwriters, for instance, with motor insurance, make all immigrants pay increased premiums until they have been established over a period of time as being good risks, but this obligation to pay premiums higher than those paid by people born in this country is not based on colour. It applies to all immigrants —Australian, Canadian, foreigners from Europe. Anybody coming into this country is called upon, without racial discrimination, apart from the fact of being an immigrant, to pay increased premiums.

My hon. Friend mentioned employment. Insurance companies in this country would be extremely foolish to put a bar of colour prejudice into employment, or into their policy operations, because most of their business is conducted overseas, a great part of it in the Caribbean, West Africa and other parts of Africa, India and Pakistan. In their overseas branches, of course, they employ the residents of the countries in which they operate.

It would be stupid and hypocritical of them to deny employment in this country to former residents of those overseas countries who are immigrants here. I am assured by the insurance companies that where there are apparent cases of discrimination they arise because the candidates for jobs do not come up to the educational or other standards which the offices apply and are not racial discrimination.

Whether this is true can only be measured by looking at the employment rolls of the companies. It is a fact that about 600 coloured staff are employed in the offices of the member companies of the British Insurance Association. I do not know how that compares with the proportion that one could expect if there was no discrimination at all.

In addition, there are training schemes for coloured people returning to take up posts in insurance offices in their country of origin. Any evidence that we have suggests that the trade associations of the insurance companies are doing all that they can to make sure that there is no racial prejudice and no colour discrimination in insurance operations or in employment. If we get any evidence to suggest that the desires of the Association are not being carried out by the member companies, then we will examine these cases. We are well aware that we can take these cases up with the com- panies concerned and with the Association. Any evidence that my hon. Friend can bring forward will be examined in this way.

Question put and agreed to.

Adjourned at twelve minutes past Ten o'clock, a.m.