Chester, UK -- (SBWIRE) -- 08/30/2011 -- Young female drivers could end up paying a heavy price for equality under new rules that ban insurers from using gender to work out premiums from December 2012 according to car insurance brokers, Adrian Flux. That’s when UK insurers will no longer benefit from a current exemption that allows them to bypass EU gender laws if their premium rates are backed up by statistical evidence.
And such evidence exists by the bucket-load, with young men twice as likely to claim on their insurance policy than young women, and 10 times more likely to have a road accident involving serious injury, where the most costly claims occur. But the courts have decided that equality cuts both ways, and from December 21 next year, gender cannot be used as a risk factor.
The new law removes one of the fundamental principles of car insurance - that premiums are calculated using statistical evidence to assess how likely someone is to claim.
With gender stripped out, it’s likely that premiums for female drivers will increase to match those of male drivers, which will only see comparatively small drops because of the difficulties most insurers are having making money on men.
Some, if not most, insurers will look at ways of discounting which will catch as many women as possible by using proxies such as occupations, or the type of car. It means the odd male secretary or nursery assistant will end up with cheap insurance but, as 95 per cent of these positions are filled by women, then insurers can continue to attract female customers and can prove that they’re not rating based on gender.
The big losers will be those women working in traditionally male-dominated occupations, or where the gender/occupation split is 50/50. Similarly, smaller cars like Minis, Fiat 500s and Nissan Micras may see their rates reduced to try to favour female drivers who are more likely to drive these cars than men.
But the big question is, what’s next on the equality hit list?
The gender change potentially opens the door to further challenges in the future based on other discriminatory risk factors, such as age. Indeed, a draft equality directive proposal focusing on age and containing an almost identical insurance opt-out to that used in respect of gender was due to go before the European Council in June.
What happens if this opt-out is similarly successfully challenged further down the line?
Cheaper travel and health insurance for older people, yes, but will they end up subsidising young drivers when it comes to car insurance? Will people complain that they have been unfairly discriminated against because of the number of claims they have had, the number of points on their licence, or because of where they live?
That does seem unlikely - after all, there is little chance of an EU directive declaring all UK post codes be treated the same, or that insurers can’t use motoring convictions as a basis for premiums. But there’s no doubt that the gender has opened a can of worms that looks likely to leave young women short-changed.
Sometimes, equality just isn’t fair.
Click here for information on imported car insurance with Adrian Flux.