subject: European Judge's Car Insurance Ruling [print this page] European Judge's Car Insurance Ruling European Judge's Car Insurance Ruling
In early 2011, The European Court of Justice ruled that disparity in car insurance based on gender was illegal and that insurers would have to charge male and female drivers the same. Whilst this new legislation won't come into effect until December 2012, it marks a huge change in the way insurance is going to be calculated moving forwards.
For many years women have benefitted from discounted rates of car cover. This wasn't simply by chance, but is in fact a direct consequence of insurance industry risk assessments and the relative statistical data on male and female drivers. Whilst women aren't necessarily better' drivers, they are deemed a lower risk than their male compatriots. The reason for this is that men statistically are involved in incidents that result in larger payouts. The British Insurance Brokers' Association recently released figures that suggested that an average claim by an 18 year old male was around 4,400 whilst a female in the same age band was only 2,700. This effectively means that teenage men pose a greater risk, which equates to around 61% in financial terms.
The biggest impact will undoubtedly be felt with female motorists. With the pricing likely to level out, at least when it comes to gender, the discount that men will undoubtedly receive (some predict this could be upwards of 10%) has to be offset somewhere else. Unfortunately it will be the females that suffer most, possibly with increases of up to 30%.
Unfortunately this will be felt most amongst younger and more inexperienced drivers most. With premiums already at record levels for the under 25 bracket, the addition of 25 or 30% on top of this will have a huge financial impact on those looking to buy car insurance. This could push many to be paying well over 1000, which could prove to be prohibitive for some particularly those with limited income.
It may mean that insurance companies now have to put a greater emphasis on the other factors they use to judge the individual risk of drivers. For instance driving convictions may see your insurance policy increase hugely and drivers who commute large distances to work or use their vehicle for their job, could suffer.
If you think of insurance as costing a set amount and everybody contributing their own share, men were always previously at a massive disadvantage. This European Court ruling has eliminated gender as a legal measure of risk, as a consequence there is a massive shortfall in the communal pot. Therefore it is the responsibility of insurers to counteract this and re-jig the prices being paid by some motorists. Whilst this may be good for some motorists, invariably some will also suffer as a consequence.
The ruling does take into account other forms of insurance too, so it won't just be car owners that feel the impact of this far-reaching legislation. Life insurance is an area that will be particularly affected as well, with men once again likely to see huge drops in their annual premiums (some suggest upwards of 10%) and women footing the cost of this. As a consequence, the pensions men receive could be reduced.
Whilst this ruling doesn't come into force until 2012, many insurers are already adjusting prices in anticipation for the legislative overall. They have to be prepared for the changeover and establish the fairest way of spreading the cost moving forwards now that gender can't be used as a risk rating. So when you receive your next renewal notice or have to buy car insurance for the first time, you can expect some variation in the price you're quoted whether you're a man or a woman.
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