Womens Car Insurance Price Increase – Is It Fair?

On the 21st December 2012, The European Court of Justice changed the EU Gender law in consideration of insurance premiums. This affected the majority of insurance premiums available to men and women in the UK, but the Motor Insurance Premium was predicted to be the worst affected. The changes mean that insurance companies cannot calculate insurance premiums based on the driver’s gender any more. Is this a fair way to price car insurance?

The European Court of Justice felt that by taking gender into account for insurance premiums; Car insurance or otherwise, they were contradicting the laws of discrimination already in place. Before the changes, insurance companies always considered gender due to the differences in life expectancy and the likelihood of a road traffic accident. Figures state that women account for fewer accidents and make fewer or lesser claims than men, therefore allowing for smaller vehicle insurance premiums.

Statistics from several sources all claim that women are involved in less road accidents than men, and are overall safer drivers. The Office for National Statistics states that in 2005, 172,000 men were involved in road accidents, compared to 93,000 women.  Quality Planning, an analytics company provided figures that say that men break 5% more traffic laws than women, including one of the most serious offences; reckless driving. Men are 3.4 times more likely to be charged with reckless driving than women.

Bradford University suggests that the difference is mainly biological in nature. A study showed that women are better at multi-tasking, and that the hormone Oestrogen plays a role. The hormone increases activity in the frontal lobes, which are the parts of the brain involved in increased attention and learning.

The media broke the story months before the law changes came into effect and there were heated discussions from interested parties predicting how the changes would affect the cost of car insurance. Younger women, such as new drivers, were proposed to be the worst affected, with an approximate 30% increase forecast.

Now the gender laws have changed, the effects can be seen, and the most recent figures from moneysupermarket.com show that it hasn’t been as bad as predicted. Of the 1.3 million premiums they have analysed, young women aged 17-18 have certainly been hit the hardest, but with an average increase of 50%, which equates to around extra £658 per year. Meaning new female drivers  can now expect to pay an astonishing  £1965 a year for car insurance.  Young male drivers  aged 17-18 have seen around an 5%% drop in their premiums; saving them just over £100 a year but they can still expect to pay more than £2100 a year.

Women aged 61-70 have been least affected have with no change to their insurance premiums where as men aged 19-21 have seen the largest reduction in their insurance premiums saving 12% which equate to almost £200 per year.

Female drivers of all ages collectively saved around 1.9% on their car insurance, men saved around 7%.  This is seen to be because of the many other factors companies take into consideration regardless of gender. Car insurance is a highly competitive market and this is also seen to have influenced the pricing. More statistics and analysis will undoubtedly be released in the next few months, when people change or renew their motor insurance, and the greatest impact will be revealed.

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