On December 21st 2012 - six months a new piece of EU legislation, the Gender Directive, was implemented. The Directive outlawed insurers from using gender as a standalone rating factor and this lead to insurance companies having to re-consider the basics of how they determine policy prices for life, health, income protection and annuities.
Tiger.co.uk has released new research showing how the implementation of the EU Gender Directive has affected car insurance prices over the last year, with a focus on the effects it has had on younger drivers.
Tiger.co.uk's Commercial Director, Andrew Goulborn, commented on the research: "Each month we examine different driver profiles and monitor changes in car insurance pricing. We have done this since 2010 and publish the data each month in our Tiger Watch monitor
to provide motorists with an overview of UK price trends".
The latest data clearly shows the impact that the EU Gender Directive has had on car insurance prices for younger motorists. Traditionally, younger females have enjoyed lower policy prices than young males as they are perceived by insurers as being a lower insurance risk. As drivers age, however, the difference in pricing between genders has narrowed. This pricing bias was based on years of actuarial analysis and reflects the fact that young women drivers tend to have lower impact accidents than young male motorists.
Without being able to use gender as a rating factor, insurance providers have had to change the way they price their policies and the Tiger.co.uk research clearly shows how young women have seen rates soar whilst young men have benefitted from reduced premiums.
The graph shown above shows car insurance prices for 20 and 25-year old male and female drivers over the last 12 months, with the data displayed on an indexed basis. The change in policy pricing is clear, as Andrew Goulborn summarises: "Over the last year we have seen prices for 20-year old female drivers rise by just over 25% - that's 10 times the current rate of inflation. Most of this increase has come since the beginning of 2013. 25-year old women have fared better, with premiums comparable with those recorded 12 months ago.
Conversely, however, young men are seeing premiums drop considerably. Prices for 20 year old men are about 14% down, whilst 25-year old men have fared even better, with policy rates almost 25% below where they were a year ago".
The EU Gender Directive is clearly having a negative impact on younger women motorists and the historical "gender gap" has been eroded. One solution for young women motorists to consider as they struggle to afford increased premiums are the new telematics car insurance policies
, many of which are targeting this group with brands such as Drive Like A Girl and Girls Drive Better.
Tiger.co.uk's Andrew Goulborn emphasised this: "Telematics car insurance policies use actual driving behaviour as a key insurance rating factor. This means that if any driver of any gender is a safer driver, then this type of policy could provide cheaper car insurance. This is particularly the case for younger motorists. We have seen increased interest in telematics policies from Tiger.co.uk site users and as a result we now have more of these brands on our panel than any other comparison site".