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Buying insurance: why it no longer pays to be a woman

Woman driving a car wearing sunglasses

You may have heard that an EU ruling means insurers will no longer be able to use a person’s gender as a rating factor to set the price you pay for your insurance. This move has been controversial – but is it fair?

This December, insurers and annuity providers will have to stop using gender as a way to set prices on products. And generally, it’s expected to have a big impact on peoples’ premiums.

Car insurers told us they expect the ruling to hit younger drivers hardest. The consensus is that premiums will rise for young female drivers to match the 37% higher premiums that young male drivers currently have to pay. I don’t expect female drivers will be looking forward to that, particularly when they’re already feeling the squeeze.

Equality comes at a price

While the impact on car insurance premiums might be substantial, it’ll be less so for annuities. Currently, the difference in rates between men and women is only around 2.5%, and they’ll probably meet in the middle next year.

Life insurance premiums will also increase. Currently, a 55-year-old man with a £100,000 pot pays 13% more for life insurance than a woman, so women’s premiums are expected to increase by more than 10%.

Whatever happens to premiums after the rules come into place, I don’t suggest you hang your buying decisions on it. Even if you want to save money, preparing for your own circumstances is more important.

Do you think it’s fair for insurance companies to put premiums up for women to avoid gender discrimination? Would you prefer to keep the system as it is?

Comments
Guest

Well one thing’s for certain male prices won’t fall to female levels.

At one stroke the goons at the EU succeed in alienating 50% of the UK population.

Guest

Well if warranties can be forcibly extended – then women’s insurance can be increased. Neither is “fair” – but nor is life.

Guest

I don’t think the EU should have meddled in insurance. Insurance should be based on risk. It is well accepted that women have fewer serious car crashes, that – on average – they live longer than men.

Guest

If one person passes their driving test at 40 and one person passes at 18, they both hold licenses for 5 years, have the same driving record, and each purchases a car of the same make, model age and mileage, then the insurance premiums should be exactly the same. If the youngster is charged more can we expect the industry to be found guilty of age discrimination?
Will I no longer be asked to pay £9000 to insure my 23 year old sons second hand Chrysler Crossfire?

Guest

I am amazed that this has attracted little comment. Perhaps when premiums start to change there will be more reaction.

This would be a very good time to push for transparency in the insurance industry. Those who don’t work in the industry deserve to understand more about how premiums are calculated.

Guest

More total nonsense from the overpaid EU bureaucrats. I just hope I live long enough to see the UK get out.

Guest

This is daft and mocks the bloody minded Eurocrats.

Insurers balance the insurance premiums taking account of drivers’ age, driving record, experience, car (both record for accidents and cost of repairs), occupation, address and gender. It is a simple fact that young male drivers have more accidents, so that distorts their risk of accident? What is discriminatory about that?

Discrimination is UNJUST or PREJUDICIAL treatment of a group of people: there is nothing unjust or prejudicial about higher premiums for risky groups of drivers. Insurers charge higher premiums for all risky groups, not just young, inexperienced males.

Journalists and jockeys fall into the high risk occupation category, so should they go to the European courts and claim discrimination because they pay more than double the premium of a steeplejack of same age, location and driving experience? It’s ridiculous because by the age of 25 or 26 the disparity due to gender is diminished.

I find it hard to believe that the government has sat back and just let the EU dictate how insurers must calculate their premiums.

Guest

Life on the road’s unfair, regardless miles driven you pay the same road tax to drive on inferior roads! Insurance is blighted by “fake claims” and for this reason alone I condone women paying an equal amount in the hope insurers will utilize the extra revenue to stamp out this fraudulent practice!

Guest
I aint a lawyer says:
3 December 2012

Those naughty Europeans, huddled in Brussels, plotting more and more ways to make us look silly. It’s part of the global plot against poor Great Britain, you know!

Still, always enlightening to see non-lawyers get down to business on something they’ve read in the Mail. I can’t see that it’s unreasonable to suggest that insurers need to be a bit more sophisticated in choosing how they price things than just say “Aah. Women good drivers. Men bad drivers.” It’s not like there isn’t a wealth of data out there which allows them to price things better than that.

Besides, while the annuity differences might be ‘only 2.5%’, that’s kind of important when you’re looking an the average price of an annuity (i.e. tens to hundreds of thousands of pounds…)