ABI age discrimination report

Car premiums could double if age discrimination for insurance ends

02 March 2009

AA Insurance has expressed concern about the potential impact on buyers of car insurance, if the Equalities Bill, due during the 2009/2010 session of parliament, extends to the sale of insurance.

Age is one of several factors, which also includes sex, that affect risk and enables the insurance industry to tailor products precisely and fairly to the individuals concerned. Age was the topic of a report published on 2 March by the Association of British Insurers.

AA comment

Simon Douglas, director of AA Insurance, says: "An unintended consequence of applying age equality to car insurance will be a reduction in premiums for a few at each end of the age range but an increase for the majority.

"There is a significantly greater likelihood of a claim being made especially by young and inexperienced people. Similarly, as age advances, the likelihood of being involved in a collision increases."

Simon Douglas points out that the lowest risk is presented by drivers between 45 and 65, for both sexes. "For example, young men aged under 21 are 10 times more likely to make a claim than someone aged 35 or over. Similarly, the size of claim for a young male driver under 21 is £4,200, compared with £1,400 for a male aged 35 or over. That's why premiums are high for young people.1

"Removing age discrimination could well double premiums for the majority of middle-aged drivers, of both sexes."


1Examples of average premiums quoted by sex and age.
Assumes a Renault Clio 1.4 litre car in CB1.
Office occupation except age 65 and above, retired.
Assumes full no-claim bonus (ie nil for age 17, four years for age 21 etc).
Source: AA Insurance

Age Female Male
17 £1810.49 £3462.07
21 £424.33 £565.26
25 £333.34 £372.93
30 £263.32 £277.54
35 £250.64 £247.13
40 £227.50 £223.74
45 £208.97 £198.01
50 £195.98 £183.97
55 £186.31 £169.93
60 £181.63 £162.91
65 £185.96 £161.66
70 £211.02 £180.46
75 £240.42 £206.19
80 £374.63 £274.04

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04 March 2009