The European Court of Justice ruling will bring to an end the use of gender in insurance pricing. This will have a significant impact on customers and the insurance industry and is almost certain to mean that young female drivers will see an increase in their motor insurance premiums from December 2012.
Insurers will no longer be able to use the exemption for insurance to base female driver premiums on statistics which show that they have lower accident rates and costs. The average 18 year old male claim cost is £4,400 compared to the average 18 year old female claims cost of £2,700.
Insurance companies will have to re-evaluate their pricing models for implementation by December 2012. Younger female drivers renewing their motor insurance after this date are likely to see a significant change.
Steve Foulsham, BIBA Technical Services Manager, said:
“Unisex rates will have to apply for motor insurance with the likelihood of an increase in premiums for females which could typically be up to 25% but in some cases more than 50%. However it’s unlikely that premiums for male drivers will reduce much as their risk is still considerable.”
Graeme Trudgill, BIBA Head of Corporate Affairs, said: “The ruling will have a significant effect on the insurance industry which has used the system of risk based pricing to award discounts to lower risk drivers like young females who are statistically safer drivers. Male drivers under 21 are twice as likely to have an accident than a female under 21. The industry will have to change its model and effectively females will now pay a cross subsidy for males on their insurance premiums.”
Source : BIBA Press Release
