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Other Changes Masking Gender Directive Effects – Gender Neutral Pricing ‘Unfair’ But Not All Bad, Broker Says

Changes in the insurance market are masking the most extreme effects of the EU Gender Directive, according to broker AA Insurance.

The directive, which came into force today, makes it illegal for insurers to base insurance premiums on the sex of the policyholder.  The directive is widely expected to increase motor  insurance costs for women drivers and lower them for men.

AA Insurance said the youngest women drivers would see the biggest premium increases, often up to 30%.

However, AA insurance director Simon Douglas said: “Not everyone will see such big changes. In many respects, insurers are stepping into the unknown.

“While the gender directive is patently unfair, given the widely different claims patterns between young men and young women, it has led insurers to re-asses how they take other aspects of risk into account – such as age, occupation and post-code, as well as the model of car driven.

“Not only is this happening at a time of falling car insurance premiums, which means that the differences will be less pronounced than they might otherwise have been, it also anticipates legal changes, including measures to control whiplash injury claims, that will take place in April which in turn will reduce insurer costs.

“Insurers are taking these changes into account and reflecting them in their rates.”

The AA said in some cases, new gender-neutral premiums are lower than the average quotes before the change while men are also seeing reductions in their premiums thanks to the change. For example, student nurses – 90% if whom are female – can expect their premiums to remain the same or in some cases fall.

The AA, which has been tracking UK premiums with its British Insurance Premium Index since 1994, expects its January report to reflect premium falls for young men of up to 12%. In middle age, the Index is expected to show premium drops for both men and women.

However, Douglas noted that it is still early days for the Gender Directive. He said: “Some insurers have been offering gender-neutral policies since mid-November and have already made some quite large adjustments and we will see more of the same.”

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