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Gender case hits insurance costs
2011-03-01 11:02:59
1 March 2011 Last updated at 15:18 Share this page Delicious Digg Facebook reddit StumbleUpon Twitter Email Print Insurance and pension costs hit by ECJ gender ruling
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//Simon Douglas of AA Insurance said insurance prices for young drivers could rise
For car insurance, women are generally a lower risk to insure than men but will, in due course, have to pay the same premiums.
The British Insurance Brokers' Association (BIBA) said currently the cost of the average car claim by an 18-year old man was £4,400, while that for an 18-year old woman was £2,700.
"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," said Graeme Trudgill of BIBA.
"The industry will have to change its model and effectively females will now pay a cross subsidy for males on their insurance premiums."
Simon Douglas of AA Insurance told BBC News that the decision could add about £400 to the annual cost of car insurance for a young woman.
Continue reading the main story Potential premium changes Women aged under 25 could see car insurance costs rise by up to 25% Men could see an 8% reduction in annuity rates, but women could see a 6% rise The cost of life assurance could increase by 20% for women but fall by 10% for menSource: Estimates from ABI commissioned research in Autumn 2010
"Particularly for women under 30 where the difference is most extreme, they currently pay about half what a man would pay," he said.
"We could see their prices go up 25-30% and men's premiums could fall by about 10%."
Maggie Craig, acting director general of the Association of British Insurers (ABI), said: "This gender ban is disappointing news for UK consumers and something the UK insurance industry has fought against for the last decade.
"The judgment ignores the fact that taking a person's gender into account, where relevant to the risk, enables men and women alike to get a more accurate price for their insurance."
PensionsThe ECJ decision will also affect the cost of buying an annuity - an annual pension income - as women live for longer than men and so receive a smaller annual pension for the same pot of money.
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