Talking point: Is car insurance sexist?

Next month the European Court of Justice will rule on whether or not it’s legal to consider gender when calculating insurance premiums. But is it really sexist that women pay less for cover than men?

On March 1, a decision will be made in Europe about the legality of using gender to determine insurance premiums.

If the court decides that this is discriminatory and bans insurers from changing prices depending on the applicant’s gender, then this could cause huge changes in the car insurance market and women could see their premiums soar as a result.

The cost of being a man

It’s certainly true that men and women pay vastly different sums for the same cover.

Take, for example, two identical applications for car insurance, made through the moneysupermarket.com comparison tool.

A 28 year-old female who has been driving for five years, with a small 1.4 litre five-door vehicle, would be offered a best quote of £618.43 for comprehensive cover. This is based on three years of no claims and with one experienced named driver added to the policy.

But, a 28 year-old male with the same car, same motoring history and same named driver added to the policy would be offered a best quote of £690.37. That’s more than £70 more just for being a man.

It’s worse if you’re younger. Look at two identical teenage drivers, and the difference for men and women can run into thousands of pounds.

But is that fair?

Statistically speaking…

The reason for this discrepancy in costs is that men are statistically more likely to have an accident when driving than women.

According to the AA, there are “sound statistical reasons for differential insurance pricing, especially for younger drivers”.

In fact, it claims that among younger motorists, men are twice as costly as women, on average. Many would argue, therefore, that higher premiums for men are not based on discrimination, but simple maths.

But imagine a different scenario. If one particular ethnic group was more prone to accidents than another, it’s still hard to imagine an insurer arguing that all members of that community should pay more – no matter what the statistics showed.

Could this cut the cost for men?

If the court finds that gender discrimination within car insurance is illegal, then men may find their premiums fall.

But at the same time, women are likely to see their premiums rise as the industry rebalances its books.

In effect, the generally-safer female drivers could end up subsidising lower costs for men, who are more likely to claim.

According to the number crunchers at the organisation the Actuarial Profession, if gender cannot be considered by insurers then young men could see their costs cut by 25% - while young women’s premiums could be dragged up by as much as 50%.

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What else could change?

Some commentators have also expressed concern that this legislation will allow younger male drivers, who are more prone to speed, to afford more powerful cars. That could increase the risk of accidents on the road.

It’s also worth remembering that there are a number of details factored into insurance premiums by providers, including age, job and number of convictions. If more of these were to be considered unlawful influences, then more statistically-safer driver could find themselves dragged into paying higher premiums.

There could also be concerns about other insurance decisions and whether future rulings might find them discriminatory.

If the European Court of Justice bans considering gender when pricing policies, this could have worrying implications for the whole insurance sector, despite the fact that insurers don’t discriminate based on prejudice, but on sound statistical principles.

What should I do?

There’s nothing you can do to protect yourself from the changes that could be ahead, except for shop around to find the best insurance policy each time you need to renew.

Motorists comparing through moneysupermarket.com save an average of £280 each on their car insurance policies.

Female drivers whose policies are up for renewal over the next 30 days should aim to buy their cover as soon as possible – and not just because March’s ruling could push up prices.

Recent moneysupermarket.com research shows that premiums are rising by 44p a day on average – so the faster you move, the more you save.

Please note: Any rates or deals mentioned in this article were available at the time of writing

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