In what may be the act that slams the lid on the coffin for discount car insurance for women, the European Court of Justice has ruled that gender differences may not be used to calculate car insurance rates.
The ECJ ruling will prohibit car insurance companies from taking the sex of their policyholders into account when determining risk factors. This is in spite of statistical evidence historically showing that gender has a significant impact on the size and frequency of motor car insurance claims.
Association of British Insurers acting director general, Maggie Craig, expressed her disappointment at the ECJ’s gender ban. The British insurance industry fought hard against such a ruling for the past ten years in order to ensure that both men and women get accurate prices for their insurance by taking the gender of policyholders into account where relevant to risk, stated Ms Craig.
Insurance companies have traditionally charged males – especially young males – much more than their female counterparts as a reflection of their higher likelihood of being involved in a serious accident. According to industry statistics, male motorists under 21 years of age are twice as likely to get themselves into an accident than young women of the same age. However, car insurers now have to abandon the current pricing model they use for their customers. As a result, young men aged 25 and younger may see premium rates drop by anywhere from 10 to 25 per cent.
Many industry experts state that making car insurance cheaper for young men may backfire in terms of safety. Young male motorists found insurance cover so prohibitively expensive for their vehicles that they steered clear of more dangerous and accident-prone vehicles such as high-performance cars. Now with rates dropping, more accidents may begin to occur, predict some experts.
Pension annuities and life insurance underwriting activities will also be affected quite significantly by the European Court of Justice’s decision.