Is the ECJ Gender Directive failing male motorists?

It’s getting on for two years since the European Court of Justice’s (ECJ) Gender Directive kicked in.
This ruling, which took effect on December 21, 2012, bans insurers from charging men and women different prices purely on the basis of their gender. But we’ve found that the ambition of creating a level playing field between male and female insurance buyers has not been fulfilled, at least as far as car insurance is concerned. And it’s young male motorists who are still being hit hardest when it comes to premiums.

Pain in the pocket

The latest analysis from MoneySuperMarket’s number-crunchers has found male drivers aged 17 to 19 are paying 26% more for cover than their female contemporaries. The figures reveal that, while female motorists in this age group pay an average of £893 a year for car insurance, male drivers in the same demographic pay £1,129 – that’s £236 more! And although it’s young male motorists who are being hit hardest in the pocket hit, it seems this is part of an overall trend that sees men paying more for cover, no matter what their age.

Gender on the agenda

Women historically paid less for car insurance than men because, as a demographic, they made fewer claims – and those they made were generally of a lower value. The gender ruling sought to put an end to insurers making gender-based assumptions on all kinds of insurance, including car, life and health insurance plans, as well as annuities. You can see why this was controversial. The stats proved that women deserved to pay less. And there’s no evidence that anything has changed in recent months as far as women’s driving habits and capabilities are concerned. So they still deserve to pay less.

Shift to neutral?

Now we’ve found that, despite the introduction of gender-neutral price-setting, men are still paying 22% more for their car insurance than women, having seen premiums rise by 3.2% to an average of £439 over the last 12 months. Women, on the other hand, have seen premiums rise by just 1.8% over the same period and now pay an average of £360 for a year’s cover.

Underwriting under scrutiny

But how can this be? Why isn’t the ECJ crashing down on motor insurers like a ton (sorry, tonne) of bricks in pursuit of its beloved level playing field?
That’s a tough one to answer. There’s no suggestion that insurers are sneakily using gender (they know if from the application form) to determine how much they’ll charge. And yet the price differentials are pretty much what you’d expect if they did. Spooky, non? Insurance underwriting – the process of determining how risky something is and charging a certain premium as a result – is a complex science. Motor insurance underwriters take all manner of things into account, including the type of car, the driver’s occupation, driving record, where s/he lives and his or her age. So all we can assume is that insurers are relying on whatever information comes to hand about claims and charging more for the sorts of cars and drivers that are involved. And the net effect – you could even call it an unintended consequence – is that things have stayed pretty much as they were, at least as far as gender differentials are concerned.

All round bad news

That’s not to say car insurance premiums generally aren’t on the move. After a couple of years of falling premiums, the bad news for all motorists is that car insurance prices are up right across the board in recent weeks, with overall premiums rising to an average of £401 – the first price increase of 2014. Although this is still considerably lower than this time three years ago, when annual premiums hit a high of £512, it highlights the need to shop around and compare quotes when renewal time rolls around.

Premium inflation

Kevin Pratt, Car Insurance Expert at MoneySuperMarket said: “Premium prices do fluctuate, and while we’ve been in a deflationary market for car cover for the last few years, costs are now creeping back up. “What is surprising is that despite the fact that gender neutral pricing has been in place in the car insurance market for several years now, the battle of the sexes is still raging on. It seems men are still falling foul of car insurer’s risk profiling systems – but a raft of factors will influence this, including postcode, profession, make of vehicle and points on a licence. “For car insurance, the bottom line is always to keep an eye on your renewal premium, to always shop around and therefore seek out the best possible deal for your circumstances - keep calm and compare. “With premium prices currently trending upwards, it is even more important to make sure you aren’t paying over the odds on your renewal.”

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