The ban on gender calculations and insurance premiums
Insurers were forbidden from calculating policyholders’ car insurance premiums based on gender from December 22nd 2012. Over a year has passed since that time, and the market has had time to readjust. The fact remains that male drivers are more likely to make a claim on their insurance, and are more likely to have a personal injury claim or other road traffic accident claim made against them. There are approximately twice as many road accidents involving men under the age of 24 than women in this age group, and collisions involving men are more likely to lead to serious injury and death than those involving women.
So what has happened to each gender’s premiums since the gender directive legislation?
At the time, people had said that the changes could see young women’s car insurance premiums increase by as much as 40%, but this worst-case scenario has been somewhat masked by a decrease in the average cost of car insurance. Accordingly, while a young woman may find that she is paying slightly more for her insurance; many young women will be paying the same or slightly less.
Some of the factors that are reducing premiums in the car insurance market include the government taking a firm line on whiplash injury claims and attempting to reduce the number of exaggerated and fraudulent claims, and an increasing level of competition within the sector.
The AA recently revealed that insurers are instead using factors other than gender to provide premiums for their customers. Insurers are analysing the correlation between a range of different characteristics and the likelihood of policyholders being liable in personal injury claims and motor vehicle accident claims – such as age, occupation, type of vehicle, experience and postcode – to determine the premiums each customer should be offered.
Young drivers are at particular risk of high premiums, the AA said, noting:
– These drivers do not have a no-claims bonus
– Around 20% are involved in a collision within six months of the date they passed their test, with the majority of these motorists men
– While just one-eighth of all drivers are 24 or under, they are involved in around one-quarter of all road traffic accidents
AA Director Simon Douglas explained that occupation provides some of the same insights into driver risk as gender, but that it is still permissible for insurers to calculate premiums based on this factor.
Student nurses and midwives pose a low risk and receive low premiums, although the fact that the majority of these workers are women cannot be considered when calculating premiums, he said. Conversely, building apprentices and trainee actuaries present a higher risk to insurers and are more likely to be male, he added.
Drivers who manage to stay behind the wheel for one year without making a claim on their insurance will see a 30% reduction in the cost of their insurance, Mr Douglas said, advising people that it is currently a good time for both women and men to buy insurance.
While the gender directive did not send the market into disarray, it is unlikely that premiums will fall much more, he remarked.
Carol Smith is a blogger and journalist who works alongside a team of Civil Litigation solicitors burnley to provide timely articles about compensation claims, health and. She has had her work published across a huge range of different platforms. She has worked as a content writer and a journalist.