The real winners and losers of the gender directive
Our latest research suggests that some people aren’t reaping the expected benefits of the gender directive, while others have seen insurance premiums rocket – in some cases, by more than 50%.
The European Court of Justice’s ruling against insurers using gender as a factor in pricing products came into force last December.
But we carried out some early indicative research tracking car insurance, life insurance and annuity rates from September 2012 to January 2013, to try and see the impact of the ruling on premiums. Unfortunately, we found that all was not as it should have been.
Increases, not equality
Before the ruling happened, crystal-ball gazing predicted that premiums would equalise, but that some groups – mostly women – would end up worse off. For example, young women were expected to be about 40% worse off when buying car insurance. However, our tracking of four providers found 20-year-old women were actually 65% worse off.
Meanwhile, men of the same age were only 7% better off. This shows that, far from equalising, premiums actually met at the higher end of the market. The same was true for 55-year-olds, whose premiums increased across the board, for both men and women.
It was a similar story for life insurance. We tracked market averages for eight scenarios and found that for a 40-year-old buying £100,000 of life insurance to cover a 25-year term, premiums rose by 20% for women and fell by just 3% for men. So once again, they met way above the middle point.
And although women were the ‘winners’ in terms of annuities, with income rates for a 65-year-old woman buying a conventional annuity dropping by just 2% (compared with a 6% drop for men), our tracking seems to suggest that in the majority of cases, people were worse off.
Insurers don’t lose out
The gender directive was always going to create winners and losers, but our early analysis shows that in some cases, the only winners appear to be the insurers. Concerns were voiced before the ruling kicked in around insurers potentially using the ruling as a chance to push premiums up, and our tracking suggests that this could be occurring. However, it’s early days – and I hope that once the ruling has bedded down, premiums may settle at more equal levels.
Whilst I accept that other factors such as economic conditions and increasing longevity may have forced insurers’ hands with pricing, there’s no denying that many people in the market for insurance are losing out. Have you seen your insurance premiums increase? If so, will you be taking measures to get a better deal?
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