“Gender-neutral” insurance has implications for young drivers
A new ruling by the European Court of Justice, which will prevent insurance companies from taking gender into account when calculating premiums, looks set to have significant implications for young drivers.
According to the Association of British Insurers (ABI), the ruling, which comes into effect in December 2012, looks set to increase motor insurance premiums for young women by around 25% while premiums for young male drivers are likely to decrease by around 10%.
The ABI has issued consumer guidance covering the main products likely to be affected by the gender ruling which include motor, life, critical illness and income protection insurance, as well as retirement products such as annuities and income drawdown.
Otto Thoresen, director general at the ABI, said: “Insurers and the UK Government fought for nearly a decade to retain the right to offer premiums and benefits priced as accurately as possible by considering risks linked to gender. But now that the battle is over, the industry is focused on preparing to give customers 'gender-neutral' rates that are as fair as possible.
“We know that there will be some differences in pricing and this will become clearer as the rule beds in. It is important to remember that gender is one factor of many used by insurers, and we hope our guidance will encourage customers not to focus on price alone, but think about their needs and shop around for products that are most suitable for them.”
Click here to read the ABI guidance.