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EU gender directive: Who should pay more for insurance?

How insurance pricing has changed since new gender rules in 2012

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This December marks five years since an EU directive came into force preventing insurers from basing policy prices on a driver’s gender.

We take a look at how the ruling changed insurance prices and what the future of insurance pricing looks like with Brexit around the corner.

EU gender directive

New rules were implemented from 21 December 2012, meaning insurers could no longer determine the cost of insurance based on whether they are male or female. The ruling affected motor insurance, life and health insurance and pensions.

One of the biggest impacts was felt in the car insurance sector. Before the ruling came into force, male drivers typically paid more than their female counterparts for car insurance cover as claims data showed that men were more likely to make costly claims.

The issue was particularly prevalent for young male drivers, with men aged 17-22 at the time paying almost £1,000 more on average than women of the same age.

The gender directive was controversial when it came into force, with just 18% of women saying the ruling was fair when surveyed by uSwitch. However, two thirds of men (66%) felt women should be treated equally and charged the same for insurance.

Changes in pricing

Once the rules changed in 2012, many female drivers felt the impact in their insurance premiums. Young women were particularly affected, with 17-18-year-olds seeing a 50% cost increase in the first month after the ruling, according to uSwitch data.

So now that insurers can’t base prices on gender, are men and women paying the same? While insurers no longer take gender into account, it appears men still do pay more on average. According to the latest British Insurance Premium Index from the AA (July 2017), young men aged 17-22 pay an average of £280 more than women in the same age group.

However, these price differences are down to other factors such as driving history and choice of car rather than insurers instantly loading prices as soon as a driver selects ‘male’ when applying for cover. Male and female drivers can expect the same premium if all other elements of the quote are identical (car, mileage, occupation, address, driving record).

Brexit and the directive

The intention of the rule change was to make things fairer for all drivers and to cut discrimination based solely on a person’s gender — it certainly helped to close the price gap between men’s and women’s car insurance premiums. But because it’s an EU directive, the gender discrimination rules could be considered for the scrap heap when the UK makes its exit from the European Union in March 2019.

While the UK negotiates the terms of Brexit, it stands to be seen what impact a reversal of the gender directive would have. Since the changes came into effect five years ago, insurance prices have increased steadily due to other factors such as increased repair costs, fraud and a rise in Insurance Premium Tax (IPT).

So do you think the UK should keep the current rules after Brexit or do you think it’s fairer to let insurers base prices on a driver’s gender? Let us know in our poll below.

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