How long will it be legal to have insurance for women only?

It is a well known in the insurance industry that women drivers are perceived to be less of a claims risk. This is not based on a mere thumb suck –but based on factual data and the claims history of both genders.

Is it not discriminating or sexist to have “women only” car insurance?

It is expected that on the 1st of March, a decision will be made in Europe about the legality of using gender to determine insurance premiums. The European Court of Justice will rule on whether or not it’s legal to consider gender when calculating insurance premiums.

If the court decides that this is discriminatory and bans insurers from changing prices depending on the applicant’s gender, then this could cause huge changes in the car insurance market and women could see their premiums soar as a result.

The question on discrimination is important also in South Africa, and not only with regards to gender discrimination. Some argue that even though statistical info might favour different pricing structures based on gender, we could easily argue that if one ethnic grouping is making fewer or more accidents, a different pricing structure in such a case would easily be perceived to be discriminatory!

Facts about insurance premiums reflecting gender

It is no secret that female drivers with the same driving experience, driving the same car will pay less for car insurance premiums. The difference in premium can be quite significant – and this tends to increase even further amongst young drivers. The young male driver has proven to be a very high risk client!

The facts are:

  • Male drivers are statistically more likely to have an accident when driving than women.
  • According to the AA, there are “sound statistical reasons for differential insurance pricing, especially for younger drivers”.
  • Amongst younger motorists, men are twice as costly as women, on average.

Why do women pay less for their car insurance premiums?

We have written a few blog posts on this topic – and referred to some interesting findings about the typical claims from both genders.

These findings include:

– Women tend to be in more accidents at slower speeds, where cars are close together.

– Men have more high-speed accidents where it is easy to lose control.

– Research suggests the way men and women drive is different.

– Men drive faster and more aggressively than women, while women are more easily distracted than men behind the wheel of car.

It is not only the accident claims that differ- but also other vehicle related claims:

– Women are more likely to have their car broken into and have something inside stolen – They are more likely to leave expensive items like their handbag or sunglasses on show than men.

– Men are more likely to have their car stolen outright.

– Men’s cars are also more likely to catch fire than women’s and they’re more likely to drive through a flood.

– Men are also more likely than women to claim for fuel contamination.

Also view:
Do women deserve cheaper car insurance premiums?
Does cheaper car insurance imply women are better drivers?
Why do some car insurers focus on women only?

How would a finding of discrimination affect the insurance premiums of men and women drivers?

There has been some speculation on this topic – but it is not yet certain how such a finding could affect the industry and insurance pricing structures.

According to the Actuarial Profession, if gender cannot be considered by insurers then young men could see their costs cut by 25% – while young women’s premiums could be dragged up by as much as 50%.

This might result in the generally-safer female drivers subsidising lower costs for men, who are more likely to claim…

Conclusion

If the European Court of Justice bans considering gender when pricing policies, this could have worrying implications for the whole insurance sector, despite the fact that insurers don’t discriminate based on prejudice, but on sound statistical principles.

We will follow this case closely and provide a more detailed discussion once a judgement has been made.

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