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Young women drivers facing a £1,000 rise in car insurance
Young women face paying an extra £1,000 a year for car insurance following a European Court of Justice decision next month, insurers are warning.
The court is expected to rule that calculating car insurance based on gender is unlawful.
Young women will be hit hardest by the ruling – they currently get cheaper deals than men of the same age, because they are considered a 'safer risk'.
Typically, a woman aged 17-22 currently pays just £1,682 a year in motor insurance, compared to a young man who pays an average £2,750.
Figures show that young men are twice as likely to make a car insurance claim and 10 times more likely to be in a crash involving serious injury than young women.
Young men are also 25 times more likely to commit a traffic offence within their first three years of driving.
The AA said that although the anticipated ruling would result in young men's premiums dropping slightly, the key effect would be a near doubling for young women's premiums.
Simon Douglas, director of AA Insurance, said: "This will be particularly bad news for young women who are proven to present a much lower risk to insurers and at present, pay premiums that are up to 50 per cent cheaper than their male peers. I expect premiums to increase substantially for them, while they will probably fall a little for young men.
According to the company, the use of gender in calculating insurance risk has been a 'thorn in the EC's side' for many years.
The AA believes that the current use of gender for determining premiums is technically illegal, although the UK has enjoyed derogation based on evidence of the its risk-based approach to insurance.
"My fear is that the European Court of Justice will no longer tolerate such exceptions and the UK will have to toe the European line," said Mr Douglas.
Added an AA insurance expert: "Insurers may look to use other risk factors as a proxy for gender - for instance occupation or vehicle type - but it isn't clear to what extent this will be permitted if it constitutes a form of indirect discrimination."
Older drivers have less to fear from the announcement, as the gender difference in insurance premiums narrow with age. All motorists are likely to be affected by the ruling to some extent however.
Insurers warn that if they are not allowed to use such an important risk factor as gender, there will be an increased risk that premiums will not cover claims costs.
This means they will increase prices to compensate for the additional risk. There will be 'winners and losers' said the AA.
"My view is that it will have a big impact for everyone," added Mr Douglas. "Insurers will need more margin to cover the risk of losses if gender can't be taken into account."
Young women are already experiencing fast-accelerating premiums, which rose on average by 18.2 per cent last quarter, compared to young men whose premiums rose by 11.9 per cent.
This is because young women are driving further – and more like men.
The AA is advising those buying a car for the first time to take the court announcement into consideration.
It advises that young women might take advantage of lower premiums while they last, whereas men could benefit by delaying their decision until after any announcement.
There are no precise figures recording the number of motorists aged 17-22 in the UK.
However the AA believes that there are in excess of 1.1 million – of which around 600,000 are male full car licence holders with around 560,000 female full car licence holders.
This does not include thousands more provisional and motorcycle-licence holders.
Telegraph 2011/02/13
Young women face paying an extra £1,000 a year for car insurance following a European Court of Justice decision next month, insurers are warning.
The court is expected to rule that calculating car insurance based on gender is unlawful.
Young women will be hit hardest by the ruling – they currently get cheaper deals than men of the same age, because they are considered a 'safer risk'.
Typically, a woman aged 17-22 currently pays just £1,682 a year in motor insurance, compared to a young man who pays an average £2,750.
Figures show that young men are twice as likely to make a car insurance claim and 10 times more likely to be in a crash involving serious injury than young women.
Young men are also 25 times more likely to commit a traffic offence within their first three years of driving.
The AA said that although the anticipated ruling would result in young men's premiums dropping slightly, the key effect would be a near doubling for young women's premiums.
Simon Douglas, director of AA Insurance, said: "This will be particularly bad news for young women who are proven to present a much lower risk to insurers and at present, pay premiums that are up to 50 per cent cheaper than their male peers. I expect premiums to increase substantially for them, while they will probably fall a little for young men.
According to the company, the use of gender in calculating insurance risk has been a 'thorn in the EC's side' for many years.
The AA believes that the current use of gender for determining premiums is technically illegal, although the UK has enjoyed derogation based on evidence of the its risk-based approach to insurance.
"My fear is that the European Court of Justice will no longer tolerate such exceptions and the UK will have to toe the European line," said Mr Douglas.
Added an AA insurance expert: "Insurers may look to use other risk factors as a proxy for gender - for instance occupation or vehicle type - but it isn't clear to what extent this will be permitted if it constitutes a form of indirect discrimination."
Older drivers have less to fear from the announcement, as the gender difference in insurance premiums narrow with age. All motorists are likely to be affected by the ruling to some extent however.
Insurers warn that if they are not allowed to use such an important risk factor as gender, there will be an increased risk that premiums will not cover claims costs.
This means they will increase prices to compensate for the additional risk. There will be 'winners and losers' said the AA.
"My view is that it will have a big impact for everyone," added Mr Douglas. "Insurers will need more margin to cover the risk of losses if gender can't be taken into account."
Young women are already experiencing fast-accelerating premiums, which rose on average by 18.2 per cent last quarter, compared to young men whose premiums rose by 11.9 per cent.
This is because young women are driving further – and more like men.
The AA is advising those buying a car for the first time to take the court announcement into consideration.
It advises that young women might take advantage of lower premiums while they last, whereas men could benefit by delaying their decision until after any announcement.
There are no precise figures recording the number of motorists aged 17-22 in the UK.
However the AA believes that there are in excess of 1.1 million – of which around 600,000 are male full car licence holders with around 560,000 female full car licence holders.
This does not include thousands more provisional and motorcycle-licence holders.
Telegraph 2011/02/13
