They are allowed a lot of discretion in deciding whether or not to issue a policy to any particular person. An exception to this is that they cannot turn down someone because of a disability; provided that the disabled person has informed the DVLA, and a licence has still been granted. A refusal for that cause alone would be unlawful. However, if their statistics indicated that the applicant's condition produced a significantly greater risk of a claim then they could demand a higher premium.
Apart from that, they can pretty well pick and choose who they want as a customer, and are free to decide for themselves how much they will charge each driver.