UK based Insurance companies will be carefully monitoring a ruling in the the European Court of Justice which is due on the 1st March 2011. This EU ruling could stop insurers using gender as a rating factor when producing their pricing structures.
Insurance prices have always been based upon the frequency of claims and the cost involved with each claim – where a risk presented shows a higher likelyhood of claim a larger premium has been required.
When it comes specifically to motor insurance there are many factors taken into account when calculating the required premium. For example an insurer may have experienced more claims in a major city compared with a rural village and therefore would charge a higher premium in the major city.
Until now the same has always applied with gender. The Association of British Insurers figures show that claims arising from younger female drivers are over 30% less than a comparative male driver and therefore females generally pay less for their motor insurance.
If the EU decides that a person’s gender cannot form part of an Insurers pricing structure then insurers will have to raise female drivers premiums to the same price as male drivers because if the law is passed it would become illegal to differentiate.
In another potential twist the French administritive authority, Haute de Lutte contre les Discriminations et pour l’Egalite, has issued guidelines trying to prevent insurance companies using age, health or any other form of differentiation when pricing insurance policies – suggesting that it is a human rights issue rather than a risk based assesment.
An industry spokesman commented that if the French movement produced any kind of result, the whole insurance industry would have to take drastic action to maintain reserves. If the EU ruling was passed big investments would be required into different pricing structures meaning overall price increases across all types of insurance.
If the EU law is passed it could spell wide spread changes to a system of pricing that has served well for many, many years.
Think Insurance can provide you with a cheap insurance quote today, whether you are looking for a motor trade, home, taxi or commercial insurance policy, leave your details and we will contact you.