The European Court of Justice has ruled that insurers can no longer assess risk based on a driver’s gender because doing so breaches equality legislation.
The ruling will affect insurance which is sold from December 2012. Currently, young female drivers typically pay lower premiums than their male counterparts because they are deemed to be less likely to have a car accident and therefore less likely to make an insurance claim.
Research from the Association of British Insurers (ABI) suggests that removing gender from the risk assessment could see young women’s car insurance premiums rise by up to 25 per cent. Men’s car insurance premiums have not been predicted to fall by much. The judgment will also affect premiums on life insurance and pension products.
The ABI has called the decision “disappointing”. Maggie Craig, ABI’s Acting Director General, said, “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.
“Insurers will now study this judgment carefully to manage negative effects for customers. Insurers will work hard to ensure that the UK insurance market remains one of the most competitive in the world offering a strong choice of products and prices for customers.”
Financial News
