The Insurance Council of Australia (ICA) has warned the Australian Law Reform Commission that new regulations designed to encourage workforce participation by senior citizens could affect insurers’ capital requirements and market competition.

The commission is conducting an inquiry into age barriers to work in Commonwealth laws, and asked whether the insurance industry’s codes of practice should be amended to remove age-based limitations on insurance policies.

ICA says in a submission that restricting the ability of an insurer to determine the risk they acquire in this way could make insurers less willing to offer particular insurance.

It could also lead to serious consequences in relation to an insurer’s regulatory obligations where increased risk profiles have increased capital requirements, ICA says.

The commission asked whether a regulatory framework should be introduced to ensure age-based limitations on insurance policies are appropriate.

ICA says such regulation would distort competition. It says insurers’ exemption from anti-discrimination laws only applies to the refusal to offer cover based on actuarial or statistical cover.

In terms of travel insurance, ICA says older Australians are more prone to medical issues and cover is rated in accordance with that risk.

Medical reasons are a major cause of travel cancellations, so the likelihood of illness also affects pricing for the risk of cancellation.

ICA says a number of travel insurance products target the seniors market, but other insurers may not accept claims from consumers who claim for pre-existing medical conditions.

For sickness and accident insurance, the submission says premiums reflect information on the likelihood of particular age groups to have accidents.

For medical indemnity insurance, the income of the practitioner and not the age is considered the relevant risk. This means older people may see a reduction in premium as they reduce working hours and income.

ICA says any changes to age limits that apply to workers’ compensation should be assessed for the impact these may have on premiums being paid by employers.