People judge others for some of the strangest reasons, whether it be the colour of your skin, the clothes you wear, how you style your hair, or what you do for a living. Unfortunately, a world without discrimination doesn’t exist — and probably never will (though we can always hope and work towards it 🤞). Instead, it’s important to recognise types of discrimination, which is why we’re going to take a closer look at postcode discrimination. Specifically in the insurance and life cover industry.
What is postcode discrimination?
It’s exactly what it sounds like — it’s discrimination on the basis of where someone lives. It goes by several other names, including postcode selection or poverty premium gap. The sad reality is that it exists all over the UK, and in many other countries around the world. Chances are, you’ve even discriminated against someone based on their postcode without even realising it. 🙊
Especially in big cities, it’s common to ask people what area of town they’re from, or which neighbourhood they live in. 🏘 Certain areas develop a reputation for being upper class, and people who live there are treated accordingly, some people even aspire to live in certain areas purely for the status that comes along with it! On the opposite end of the spectrum, you have people who live in areas that are deemed lower class and are subject to discrimination based on the location of their home.
Take the boroughs of London for example — places like Kensington, Chelsea, or Westminster have a reputation of being some of the more expensive areas of the city, even though the poverty and crime rates are actually quite high. Then you have places like Croydon, which despite having a lower poverty rate than Kensington, Chelsea and Westminster, has a much worse reputation.
Location, location, location 📍
Anyone who has purchased a home, knows that location is key. 🔑 You might choose to centre your search around a certain neighbourhood due to its reputation, amenities, low crime rates, etc. So if you do this for our own personal reasons like buying a house 🏠, or choosing a school for your kids, it unfortunately makes sense that this sort of discrimination would exist on a more institutional level as well.
You’ll find postcode discrimination typically exists in regard to employment, credit rating, and insurance. Let’s take a closer look at what that means.
Say you’ve applied for a new job somewhere — it’s standard practice to include your address on your CV. Recruiters or Human Resources departments can make an instant decision based on your postcode whether or not they will even bother reviewing your application. It isn’t a very ethical method of recruiting, but unfortunately it does happen. A study from 2010 went on to try and prove that postcode discrimination does exist and is part of the explanation for unemployment and worklessness in deprived areas.
When it comes to figuring out insurance premiums for any given policy, certain demographics come into play. Quite often, one of those is the area in which the policy holder lives. Insurance companies use the postcode to analyse crime rates, population density, and unemployment to figure out if you pose a larger risk, and then consequently charge higher premiums. Postcode discrimination exists in nearly all branches of the insurance industry! 😔
At Bequest, we don’t believe in postcode discrimination. The reason you are asked for your postcode on our website is just for sending documents like your will and for having your address on file. We do not use your postcode to determine how much life insurance you will pay.