Car insurance and gender

A quarter of Brits still unaware that insurers will no longer be able to take gender into account

A quarter of Brits still unaware that insurers will be no longer be able take gender into account

A quarter of Brits still unaware that insurers will be no longer be able take gender into account

More than a quarter of Brits (26%) are unaware that their car insurance premiums will soon be affected by a European gender ruling, according to AA Insurance.

Women are least likely to be aware (29%) that insurers will be no longer be able take gender into account when calculating a driver’s car insurance premium, according to an AA/Populus survey of 22,713 AA members.  Yet women are most likely to see their premiums increase under the new law – young women particularly could see their annual premiums rocket by 25% or more.

21 December

The new ruling comes into effect on 21 December this year, just weeks away.  Yet respondents were vague about when the change would happen: of those aware of the law, 40% had ‘no idea’ when it was going come into effect.  A further 23% thought it was going to happen some time next year.

Young drivers aged 18-24 are most aware (78%) of the change in law, which follows a ruling last March by the European Court of Justice.  At present, young women pay premiums that can be 40% cheaper than their male counterpart.

People in middle age and above are least likely to be affected by the European Court of Justice ruling

Simon Douglas, director of AA Insurance

Comment

Simon Douglas, director of AA Insurance, points out that 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.

“Calculating premiums based on that risk is fair and it works,” he says. “But it has been abandoned in favour of gender equality.

“For many years, insurers have charged young men much higher premiums than young women because they are so much more likely to make expensive insurance claims,” he explains.  “But as they get older, the difference between men and women in the number and cost of claims they make reduces and from around age 40, men and women pay similar premiums. 

People in middle age and above are least likely to be affected by the European Court of Justice ruling.

Up, down or no difference?

When asked whether they expected their own premiums to go up following the ruling, half (49%) thought that they would while 38% thought it would make no difference. 

Women were more concerned with two-thirds (66%) against 40% of men expecting to see a rise in the cost of their annual policy. 

Of the group most likely to be affected - those aged 18-25; 72% of women thought their premium would rise while 35% of men thought theirs would fall.  Overall though, a third (30%) of this age group expect to see no difference after the gender ruling.

Gender neutral policies

Most insurance companies are likely to be offering gender-neutral policies by the end of November, including AA Insurance. 

Those expecting to renew or take out cover over the next couple of months may be advised to get a quote as soon as possible, before their insurer converts to gender-neutral policies and then obtain a gender-neutral quote.

The gender-specific quote should be honoured while it is still valid (typically 28 days) and the customer can then decide which policy is best for them.  However, insurers will not be allowed to honour a gender-specific quote after 21st December.

Advice

Young women who have passed their test and are thinking of buying a car should act fast: gender-neutral premiums for them are likely to be much more expensive.

Young men in the same position may well be advised to wait until the New Year.

Black box telematic insurance

Drivers who buy a 'pay how you drive' policy that uses a 'black box' GPS device will be less affected by the gender ruling. 

Although the initial premium on such policies takes gender into account, there is greater emphasis on how customers drive, regardless of whether they are male or female.


12 November 2012 (updated 10 October 2014)

AA/Populus study of 22,713 AA members between 23rd and 29th October 2012

 

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