While the cost of living in the UK soars, car insurance seems to be the front runner in the price increase stakes. Although the government is due to roll out its new CIE Act in April this year in an effort to relieve policyholders of the £30 per year cost of uninsured driver accidents, how, then, is women’s car insurance set continue soaring at such a ferocious rate?
In December 2012, Britain is set to see an historic change in the way its insurance industry calculates claims. The decision has already been made by the European Court of Justice that no longer will the insurance industry be able to charge men and women differently based on their sex if it is a “determining factor” in risk assessment, and where that factor is also based on “relevant and accurate actuarial and statistical data”.
The case, which was brought to the ECJ by the Belgium Consumers Association, challenges the EU Gender Directive’s Article 5, which argues that allowing for sex discrimination in the calculation of insurance claims is unfair and should be made illegal.
Britain has 6.3 million drivers on its roads, all of whom have suffered at the hands of a 15.8p per litre rise on 2010’s already steep petrol cost. While all drivers have been subject to this price increase, women are going to be the ones who really feel the impact of the ECJ’s recent landmark legislation.
The British Insurance Brokers' Association (BIBA) have projected that the ruling will see the cost of car insurance for women rise by up to 25 per cent, with some women’s policies even set to soar by as much as 50 per cent.
Whilst the AA have dubbed the new Act “unfair”, BIBA’s head of corporate affairs, Graeme Trudgill, has also made his case against the move, and highlights that it will simply serve to penalise statistically safer drivers – not those who cause the most damaging and expensive accidents.
"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."
The contention that women are safer on the road than men is widely-known and accepted. They take less risks and are therefore less prone to being involved in major road traffic accidents. For example, the Social Issues Resource Centre published a report summing up the facts in 2004, outlining that:
“In all studies, without exception, men have been shown to have a higher rate of crashes than women. This gender difference is most marked in the population under the age of 25 years, but is also evident in older drivers.”
In light of this, moneysupermarket.com women’s car insurance expert, Julie Owens, has urged female drivers to be diligent when it comes to selecting renewing their next insurance policy:
"Although the ruling doesn't come into force until December 2012, it is likely we will see a convergence in pricing over the next 18 months.
"If your car insurance is due for renewal in the next couple of months then you
should shop around and buy your new cover as soon as possible. On average, using
moneysupermarket.com can save you £280 on your car insurance policy, which is a
significant saving at a time when the cost of motoring is becoming more expensive."
So with women’s car insurance rates now set to skyrocket by as much as 25 per cent on current premiums, even in the run up to the enforcement of December 2012’s ‘fairer’ ruling, women’s car insurance companies such as Sheila’s Wheels, Diamond and Lady Insure, are naturally disappointed by the move.
Insurance group RSA has accused the new legislation of “flying in the face of common sense”, and added:
“It is completely disadvantageous to the very people it was intended to protect and prevents insurers from using a legitimate rating factor.”
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