EU outlaws cheaper car insurance for women
Published 02/03/2011 | 05:00
INSURANCE premiums are set to rise across the board following a binding European Court of Justice ruling that will ban insurers from using gender to set premiums.
Female motorists are likely to be the big losers. They pay less for insurance because they have fewer accidents. But from the end of next year, insurers will not be able to charge a different premium to men and women.
The ruling could mean that younger women will face a rise of up to 25pc in motor premiums, while young men might only see a small decrease.
However, even those in their 30s and 40s are set to be hit hard by the new ruling. And some companies may even stop insuring young drivers altogether, it was predicted yesterday.
At the moment, a young male driver can end up paying €600 more a year for motor insurance than a similarly aged women with the same car.
Even a 35-year-old male driver pays up to €120 more for motor insurance than a women in the same circumstances.
But as well as offering "unisex premiums" to men and women, insurers are set to react by pushing up all premiums.
The ruling will mean higher premiums for everything from motor insurance to life insurance and critical-illness policies, as well as increasing the cost of pensions, according to Conor Faughnan of AA Insurance. Some motor insurers may even withdraw from providing cover for younger drivers, he warned.
"Insurance companies will be forced to be blind to a critical piece of data -- the gender of the insured person. This will result in insurance premiums being pushed up across the board," he said.
Actuary Dermot Corry of consultants Milliman said the ruling would mean a substantial increase in premiums.
He said the uncertainty about how the new rules would pan out meant insurers would be forced to push up premiums to allow for this.
Insurers said the impact of the ruling would mean that women drivers would end up being overcharged for motor insurance, as they would have to subsidise the premiums of men.
Mike Kemp of the Irish Insurance Federation said this was because insurers would be forced to offer "unisex premiums", instead of loading men because they have more accidents.
However, the ruling is not necessarily a victory for "boy racers" as all drivers will end up with higher premiums, experts said.
The ruling means that from December 21, 2012, insurers can no longer differentiate between men and women in pricing insurance contracts.
"Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination," the court said.
The rulings will also make life insurance more expensive for women.
Currently, men pay more for life insurance as they generally die before women, meaning that they are more likely to end up getting a payout from insurers.
Both men and women are set to pay more for private pensions. Men tend to die younger, so it is cheaper to pay a pension to a man than a women.
Many people with a private pension buy an annuity from an insurance company when they retire. This pays them a regular income. But because women live longer, it is more expensive for them to buy an annuity.
Jerry Moriarty of the Irish Association of Pension Funds said: "The ultimate effect is that men will have to pay more for their annuities or receive less, as the price of annuities for women will need to come down and that of men will have to go up.
"However, as finding that equal point may not be straightforward, it is likely that insurers will err on the side of caution until they have some real experience of what the effects are," he said.