Women Drivers Penalised By EU Decision
Our monthly car insurance price monitor – Tiger Watch – was published this week and the results for June show, to use a footballing analogy, a game of two halves. The overall result is that average premiums are about 6% lower than they were a year ago and about 0.6% lower than last month. Generally good news. However we need to remember, however, that June 2011’s figures marked the peak in UK motor insurance prices following a period of 18 months of massive inflation – so we’re coming off a high base.
So that’s the good news for the average driver. The problem is – and it’s always the case with statistics – that none of us is really “average”. The top line figures mask a significant differential between trends in pricing for male and female motorists – hence the “game of two halves”. Traditionally, women have paid less for their motor insurance than their male counterparts because, from an insurers’ point of view, they represent a lower risk. Not necessarily because they have fewer accidents, but because the costs involved in these accidents tend to be lower.
The June Tiger Watch figures show that male drivers were seeing car insurance quotes running at about 2.3% below the corresponding May 2012 figures. But for female motorists we actually saw prices increase by 1.2% - that might not sound like much but it equates to over 14% on an annualised basis, four times the current rate of RPI!
This difference in price movements for male and female premiums that we have seen in June has been part of a recent trend. Looking back at our Tiger Watch data over the last four months we’ve seen the average price advantage enjoyed by women motorists reduce from 12.4% in March to 6.1% in June. So the price differential has more than halved.
Why? Well looming on the not-too-distant horizon – or December 21st to be precise – is the rather scarily titled EU Gender Directive. What is it? Well, in summary, it will stop insurers from discriminating between the sexes when it comes to setting insurance prices. This applies to not just motor insurance. It is the spectre of this Directive being applied in six months’ time that is starting to drive up car insurance prices for women. Conversely we are seeing premiums for men start to reduce as prices equalise.
Is it fair? Our view is that it makes no sense for insurers to treat male and female motorists as a homogeneous group when evidence clearly indicates that they present a different risk to insurers, especially when it comes to younger drivers. Consider this: Male drivers under the age of 22 are ten times more likely than women in the same age group to have a serious crash. Of course we’re supporters of equal rights and equality but it does seem to be a bizarre decision by Europe’s policy makers to prevent insurers from using the considerable data regarding gender at their disposal when it comes to setting premiums, resulting in what will really be an unfair penalty for women motorists.
We’ll keep looking at this over the next few months.