Car Insurance Monitor

Gender and the effects on car insurance premiums prices

Background

In March 2011, the European Court of Justice (ECJ) ruled that insurers couldn't use gender as a factor in the calculation of insurance premiums. Directive 2004/113/EC, commonly known as the 'Gender Directive', comes into force from December 21st 2012.

When analysing the data to see the impact gender has on the cost of car insurance, we can see that in the three months since the last Monitor, the overall difference between male and female drivers has increased. It is now £115 meaning that premiums for men are 29.1% higher than for women. That's an increase of 2.8 percentage points compared with the gap of

26.3 per cent or £112 during Spring 2011.

Although the cost of cover overall for both genders has decreased since spring 2012, the rate of deflation for female drivers is sharper.

Typically, male car insurance premiums are down by £28.96 or 5.4 per cent quarter-on-quarter, whereas the typical cost of car insurance for a female has decreased £31.74 or 7.5 per cent. The sharper fall in female car insurance premiums accounts for the gap between the genders widening over the last three months.

Car insurance and gender over the last 12 months

gender

While year-on-year and quarter-on-quarter, we've seen decreases in the cost of cover for everyone, the last two months in the analysis (August-September) have shown a slight bump up. In August/September, female premiums were up by £7 (+1.8 per cent) and those for men were £6 higher (+1.2 per cent). However, a similar trend was seen at the same time last year, so we may see them fall again in coming months.

Year-on-year, premiums for women have fallen at a faster rate than those for men, meaning that in summer 2012 men now pay 29.1% more for car insurance than women on average. This gap is up 1.4 percentage points from 27.7% in summer 2011. Over the last 12 months, the average cost of car insurance for male drivers has decreased £58 or by 10.4 per cent from £566 to £508. The reduction in female premiums was sharper over the last year, with average premiums decreasing by 11.3 per cent or £51 from £444 to £393.

Kevin Pratt, insurance expert, comments:

“In the last Monitor we reported that the cost of car insurance for female drivers was particularly competitive and this is reflected in this data set showing that the gender gap is actually increasing as insurers look to take on female business ahead of the ECJ deadline.

“Since the last report, we have also seen statements from some insurers about intentions for car insurance premiums in the lead up to the rule change and beyond. With new timescales to focus on, it will only be a matter of time before the pricing updates are implemented. For female drivers coming up for renewal imminently shopping around early for car insurance could make all the difference to what they pay for their cover next year.

“For male drivers with renewals due towards the end of the year, they may see that when comparing prices they can make some considerable savings compared to what they've experienced in the past as the rule change isn't expected to have the negative impact female drivers may suffer from."

The gender story within the different age groups

Looking at the data set, we can see that in every age band, male drivers pay more on average for their car insurance than their female equivalents. Since the last Monitor, it's good to see that both genders have seen a decrease in premium across every age bracket we analyse. The biggest percentage decrease was to the average cost of car insurance for female drivers aged 17-19; this is down by 7.6 per cent in spring - summer 2012. The lowest level of price deflation was experienced by females in the 20-24 years age bracket.

Year-on-year we also see across the board reductions in premiums for each gender in all age groups. The highest level of deflation was in the band for females aged over 65 at 15.4 per cent over the last year. The lowest decreases in average car insurance prices occurred in the male 17-19 years age bracket with just a 1.0 per cent reduction in 12 months.

gender

†82% of shoppers obtained a quote in 5 minutes or less. Source eDigitalResearch December 2012.