Gender neutral insurance

'Unfair' insurance Christmas present from EU

the youngest female drivers will see the biggest premium increases, often up to 30%

the youngest female drivers will see the biggest premium increases, often up to 30%

The European Court of Justice gender ruling comes into effect at midnight on Friday 21 December is unfair, but it’s not all bad news for drivers.  While men are likely to see premium discounts, in some cases average premiums based on occupation or age, can lead to lower premiums for women as well. 

All car insurance policies bought after Friday 21 December will be gender neutral, thanks to an ‘unfair’ European Court of Justice ruling.

The new ruling makes it illegal for insurers to sell policies that calculate premiums based on gender after that date. 

However, other changes in the insurance market are affecting premiums, masking the most extreme effects of the gender-neutral environment.

Nevertheless, the youngest female drivers will see the biggest premium increases, often up to 30%.

it has led insurers to re-asses how they take other aspects of risk into account – such as age, occupation and post-code, as well as the model of car driven

Simon Douglas, director of AA Insurance

Into the unknown

But Simon Douglas, director of AA Insurance, says: “Not everyone will see such big changes.

“In many respects, insurers are stepping into the unknown.

“While the gender directive is patently unfair, given the widely different claims patterns between young men and young women, it has led insurers to re-asses how they take other aspects of risk into account – such as age, occupation and post-code, as well as the model of car driven.

“Not only is this happening at a time of falling car insurance premiums, which means that the differences will be less pronounced than they might otherwise have been, it also anticipates legal changes, including measures to control whiplash injury claims, that will take place in April which in turn will reduce insurer costs.

“Insurers are taking these changes into account and reflecting them in their rates.”

In some cases, new gender-neutral premiums are lower than the average quotes before the change while men are also seeing reductions in their premiums thanks to the change.  For example, student nurses – 90% if whom are female – can expect their premiums to remain the same or in some cases fall.

The AA, which has been tracking UK premiums with its British Insurance Premium Index since 1994, expects its January report to reflect premium falls for young men of up to 12%.  In middle age, the Index is expected to show premium drops for both men and women.

“But it is early days,” Mr. Douglas says.  “Some insurers have been offering gender-neutral policies since mid-November and have already made some quite large adjustments and we will see more of the same.

Regional differences

Premiums are now being influenced much more by regional differences, for example in injury claim trends.  In addition, the ABI moved  to 50 rather than 20 standard groups for vehicle types and this provides greater scope for refining the way they rate particular cars, based on number and type of claims made by particular vehicle groups.

Historically, young women have paid premiums that could be 40% cheaper than their male counterpart, because young men are 10 times more likely to be killed or seriously injured in a car crash than those aged 35 or over and more than twice as likely as young women to suffer a serious collision.

Telematic insurance

Drivers using black box or ‘pay how you drive’ policies such as AA Drivesafe will be least affected by the gender ruling.  Premiums for such policies are based on the way that customers drive, regardless of whether they are male or female.


(21 December 2012)