Ban on Gender Discrimination Will Cost Women Dear?
The European Court of Justice (ECJ) recently ruled that from the 21st December 2012 it will be illegal for insurance companies to discriminate on the grounds of gender when calculating premiums for consumers in European countries.
It is hoped that this will spell an end to the sky high car insurance premiums which are now being offered to young male drivers, with research by MoneySupermarket.com suggesting that 5% of drivers have already been forced off the road as a result of these price rises.
However, not everyone is happy about this ruling; with it expected that female car insurance premiums will rise by up to 50%. We therefore take a closer look at these regulations, which are expected to have a cross over impact on countries outside of Europe.
Mixed opinions
The ban on gender discrimination has been welcomed by prominent members of the European insurance community such as Martin Lewis from moneysavingexpert.com, who commented: “Why should one man pay more because others behaved badly?”
This once again raises the issue of discrimination, with Lewis adding that stereotyping people on the grounds of gender is actually no different from stereotyping on the grounds of race, as it doesn’t mean that everyone classed in a particular group will act in the same way. The head of car insurance at MoneySupermarket.com, Steve Sweeney, has supported this viewpoint “Ultimately, I think people should be treated fairly based on their own individual risk profile.”
However the ruling has not been welcomed by everyone, with the AA’s Simon Douglas claiming that the majority of young male drivers will not be paying enough to cover their costs following this ruling. This is due to the fact that young male drivers are statistically ten times more likely to be involved in an accident than motorists over the age of 35.
Insurance companies are ultimately forced to pick up the bill of any claims made by these young drivers, with the additional costs now set to be spread out amongst female motorists: “If insurers are not allowed to use such an important risk factor as gender, there is an increased risk that premiums won’t cover claims costs and they will need to increase prices in aggregate to compensate for the additional risk. This is bad news for motorists generally, although of course there will be winners and losers.”
A less considered viewpoint was offered by British politician Phillip Hollobone who merely stated: “we all know that women drivers are better than men”.
Cross Atlantic impact
As has been noted by Business academic Peter Dicken, we live in an increasingly globalised world. This means that financial and legal markets are becoming intertwined and that American legislators will therefore be likely to introduce similar rules in the interests of trade harmonisation. It should also not be forgotten that many insurers that operate within America also have operations in Europe, which increases the chances of trade harmonisation efforts being made.
American consumers should therefore take a close look at what happens in Europe over the coming years as a result of this ruling so that they can be better prepared in the event of it hitting America. Whether it will ultimately be a good or bad thing remains to be seen, with opinions on the morality of this case appearing to be split even amongst the most experienced car insurance experts. However, one thing which is certain is that female car insurance premiums are set to increase.
Author Bio- This is a guest post by Mark Martin. Mark is a motoring and insurance expert from the UK. He works for price comparison website MoneySupermarket.com and is therefore up to date with the latest developments within the market. Mark is a keen motoring racing enthusiast, and has followed Formula One for all of his life.
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