Before December 21, 2012, women generally enjoyed lower car insurance premiums than men simply because, statistically, women make fewer claims. But thanks to the European Court of Justice's Gender Directive, insurers can no longer take your gender into account when they calculate your insurance premiums.
This means young women could find out at their next renewal that their insurer wants them to pay substantially more for their car insurance. Indeed, teenage female drivers are currently being charged up to 20% more following the December 21 changes.
On top of this, insurers are expected to pass on increased costs they face this year for buying additional cover that pays out in the event of high claims - known as reinsurance.
Here we look at the factors that could affect how much we pay for our car insurance in 2013.
Vital to shop around
The core message is that all drivers should
shop around for their car insurance at renewal. It's crucial not to 'auto renew' with your current insurer - the most competitive prices are offered to new customers rather than existing ones.
MoneySupermarket's car insurance quote service compares more insurance offers than any other site. And the prices we can access mean you won't get a cheaper deal by going direct to an insurance company.
Our analysis of quotes running through our motor insurance facility shows car insurance premiums for women aged 17-19 have risen by 20% in recent days. This is because insurers can no longer distinguish between males and females, so have to assume a higher degree of risk.
But this has been to a certain extent counterbalanced by a decrease in recent days of 15% for teenage men.
A crumb of comfort for young women who have been driving for over a year is that the prices being levied now are 'only' 7% higher than they were at the end of 2011. This is because the 20% gender-related hike is being partially off-set by increased competition between insurers and reduced claims costs as the result of a crackdown on fraud.
This is even better news for young men, who are now paying 25% less than in the fourth quarter of 2011, thanks to the combination of these factors and the fall-out from the gender ruling.
It remains to be seen whether women will continue to face higher premiums as we go through 2013, or whether insurers will adjust prices as they get used to the new regime. We'll continue to monitor the situation and keep you posted.
High claims bills
There are other factors that could push premiums up in 2013, making it even more vital to shop around. One of the biggest inflationary pressures is higher reinsurance premiums.
Reinsurance is insurance for insurers. They take out reinsurance policies to protect themselves against high claims costs so that they can still afford to pay a customer's claim if it goes over a certain amount.
But the reinsurance premiums paid by insurers have jumped by around 35%-40%. Reinsurers have pushed up the cost of their policies due to concerns over the large payments that are increasingly being awarded to car crash victims - and there is a fear that these higher costs will cascade down to car insurance buyers.
In many circumstances, if a claim is made on a car insurance policy, the claimant gets a lump sum payout and that's that. But if the car crash victim has been seriously injured - so much so that their lifestyle has to change, perhaps because they are now paralysed - the courts are increasingly deciding to award an initial lump sum plus regular payments to the victim to help cover medical expenses, living and care costs.
These regular payments are known as a periodic payment orders (PPO) and are paid for the lifetime of the claimant. The number of PPOs has increased over the past few years - judges want to structure payments so that the money doesn't run out while the claimant is still alive.
So, even though car safety has improved, reducing the number of serious injuries sustained in car accidents, the amount of money insurers are now paying out is increasing. This is hardly surprising when you consider that the insurer may have to make these regular payments for decades thanks to improved life expectancy levels, making the total costs very high.
In one instance, a teenage girl who received catastrophic injuries in a crash was awarded a £7.5million lump sum and a PPO of over £200,000 per annum.
The trend towards substantial PPO awards has created greater uncertainty for insurers, which has led to them buy more reinsurance. But the reinsurers have seen what's happening and are increasing their premiums as a result.
After years of losing money on car insurance business (hard to believe, given what we pay in premiums, but it's true), insurers want to generate profits. This is why they are expected to pass on these higher costs to their customers - you and me.
Young drivers are expected to be hit hardest because they are statistically more likely to cause a serious accident and trigger a big claim from an injured third party. Industry experts say the average cost of car insurance for drivers up to the age of 22 is around the £1,400 mark, but this could rise by around 15% thanks to higher compensation payments, taking the figure above £1,600.
For drivers older than 22, the price hike is expected to be smaller. But even a 3% rise could push the typical premium up by £15-£20 or more.
Keep the costs down
None of us want to pay more for our car insurance, so here are a few steps you can take to help keep the costs down regardless of what happens elsewhere:
Always shop around and compare quotes to ensure you're getting the best deal
Never simply accept your renewal quote - the best deals are offered to new customers, not existing ones
Increase the security on your car by fitting an alarm or immobiliser and park your car in your garage or on the driveway overnight if possible
Keep the mileage as low as possible
Consider having a black box installed in your car to monitor how safely you're driving - the safer you are, the lower your premiums will be
Increase your voluntary excess - but don't make it so high you won't be able to pay it if you make a claim.
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