Should Women Pay the Same as Men for Car Insurance?

Should Women Pay the Same as Men for Car Insurance?

by Rebecca Hall on 31 Mar, 2011

A recent EU ruling means that car insurance providers can no longer base prices by discriminating on gender. The change is set to come into effect in April 2012, but many providers are already set to change their pricing in line with the ruling to ensure full compliance by the deadline.

Prior to the ruling, women enjoyed far cheaper car insurance than men, particularly amongst younger drivers. This was based on statistical evidence that women tend to be far more careful drivers than men, (again particularly amongst younger drivers), meaning they were less likely to claim. As a result, women were considered less of a risk to insurers and so were asked to pay less.

Now that car insurance providers can no longer discriminate on gender, premiums will cost the same for men and women. It’s important to note that the ruling dictates that the premiums must now be equal, not that cheaper insurance for women must be brought into line with prices charged to men. However, this is exactly what providers are doing.

The bottom line is that this ruling will not affect men, but will, in most cases, dramatically increases car insurance costs for women.

This is understandable given the insurance companies’ primary remit: to make money for its shareholders. But is it really fair?

There are different ways to introduce parity between the sexes. For example, insurers could have made premiums for men cheaper, in line with prices for women. Naturally this would run counter to providing value for shareholders, but an average could have been worked out between the two.

Why should insurers consider an alternative to simply raising the cost for women, achieving nothing but greater profits for themselves? Simply because the statistical evidence shows that women are generally more careful drivers than men. And it is statistical trends like these that usually determine how much of a risk someone is to insure. To start charging women the same as men for their car insurance is to run counter to every evaluation technique used in the insurance industry.

On the other hand, car insurance is one of the few areas where men are discriminated against rather than women, so in that sense it is simply playing fair. However, when you can be evaluated based on everything else in your life, it seems strange that a factor that makes a considerable statistical difference can be discounted.

About the Author

Rebecca Hall

Rebecca Hall worked as an independent mortgage adviser for 10 years before turning to financial journalism full time. She has strong links to the CAB advising families on mortgage refinancing.