With one month to go until gender-neutral pricing, the Association of British Insurers (ABI) has today stressed that the insurance market will remain competitive despite the ruling and has published keyconsideration points for consumers set to be affected by the changes.
Adeola Ajayi, spokesperson at the Association of British Insurers, said: “We lobbied against this ruling for nearly a decade. Insurance is all about matching price to risk and we wanted to retain the right to offer customers fair premiums and benefits based on risks linked to different genders.
“Insurers are now busy working hard to adjust their systems and remain committed to offering premiums and benefits that reflect risk as accurately as possible, despite having to ignore decades worth of data. The UK insurance market is competitive, with customers able to shop around many insurers, and it will remain competitive, gender or no gender.”
The ABI has produced guidance for consumers at www.abi.org.uk/genderruling
Key consumer consideration points
– Policies set to be affected are motor insurance, life, critical illness and income protection insurance and retirement products, such as annuities.
– Remember, gender is only one factor of many that insurers use to price premiums and benefits.
– Customers, should not focus on price alone, but make sure they take out policies that are suitable for their needs.
– It is important to shop around. Shopping around for an annuity, including seeing whether you qualify for an enhanced annuity for example, could have a much bigger difference on your benefit. An ABI initiative will make it much easier for customers to do this.
– Seek advice from your insurer, broker or an independent financial adviser to better understand your options.
– Customers considering cancelling current policies to renew early should consider this carefully as it may well become a false economy once cancellation and other transactional costs are factored in.
– The purchase of insurance products, especially retirement products, which are a once in a lifetime purchase, should never be rushed. Speak to a broker or independent financial adviser to fully understand your options.
Gender has always been one factor in assessing risk in insurance, with different risks linked to gender being taken into consideration to calculate premiums and benefits. Women, for example, have typically benefited from lower car insurance premiums because of their lower accident rates, and men have tended to receive higher annuity rates because of their shorter life expectancy. But a ruling from the European Court of Justice in March 2011 means this will all change by 21st December 2012 as insurance pricing becomes ‘gender-neutral’.
