In December 2012, the new European Union regulations regarding car insurance came into effect. The EU gender directive meant that insurers can no longer consider your gender at all in the application of motor insurance, or any other kind of insurance.
On top of motor insurance, life insurance, private medical insurance, income protection insurance, and annuities are covered in this directive.
Historically young women have paid significantly less car insurance premiums than young men to reflect the fact that they are a lower risk group when driving. However, car insurance is included in the current ruling and it is the area where we have seen the biggest changes due to the EU gender directive.
Under these regulations insurance companies could no longer use gender as a factor in the calculation of their premiums. Despite the fact that women are statistically much safer drivers, the premiums of 17-18 year old women rose by 50 per cent during the first year of the new regulations.
Indeed, this seems surprising when you see that a male drive under the age of 21 is twice as likely to make a claim due to an at fault accident with no costs recovered than a women of the same age. Therefore it was predicted widely before the directive came into force that women under the age of 25 would seem premiums rise significantly as they created a single age category with the most dangerous drivers. These predictions have by and large been reflected in the premium prices offered by insurers during 2013.
However, the highest payers are still 17-18 year old young men who paid on average £2,191 in 2013—a five per cent drop from the pre-ruling £2,298 paid in 2012. This is still much more than the post-ruling £1,965 paid by 17-18 year old young women in 2013.
Prior to the ruling the insurance industry were permitted to use gender to calculate premium prices based on the statistical difference between men and women. The insurance industries line was, “men make more claims, and therefore men should pay more.” However, the European Union disagreed and found it was an unfair distinction to make.
There were fears throughout 2012 that women would see their motor insurance premiums more than double, whilst men would see only five or ten per cent drops. In reality however, older women, between the ages of 36 and 40, only saw a two per cent rise in 2012.
It is still the case, in spite of the new ruling, that in 2013 men paid more than women. Whilst their average payments dropped from 14 per cent more than women to two per cent more, the average female premium of £529 remains consistently lower, than the nearly £100 more expensive, £619 paid by the average male.
Insurers have adjusted their risk ratings to apply more to age categories to reflect the new gender-neutral quotations offered. Yet insurers are known to now be using your employment status and job post held in order to determine your risk by making gender estimations. Whilst gender stereotyping may seem old-fashioned in 2014, it is clear that insurance companies are trying harder than ever to cover their risks.
Always make sure you shop around, using multiple comparison services before you settle with a quote. There is no limit to the number of times you can search with slightly different parameters for quotations.
If you’re a young driver, then you should consider specific insurance providers who provide insurance for young people in particular—using technology such as smart boxes that rate your driving and calculate a premium as you go.
Insurance is getting more and more expensive, and for women it is clear that the 2012 EU gender directive has led to a large rise in young women’s premiums and only a small drop in those of young men. However, for the older groups the changes have hardly been spectacular. It is more important than ever to shop around as much as you can.