It may not be the end of the World but today sees the end of cheaper car insurance for female drivers as the European Court of Justice (ECJ) directive on gender and insurance comes into force.
Specialist women only car insurers and brokers such as Sheilas Wheels and Diamond must be dismayed as their only market and product differentiation proposition has effectively been wiped out overnight.
However behind the scenes the general car insurance market must be rubbing its hands in glee at the prospect of seeing premiums and profits rise by as much as 25% for female drivers aged between 17 and 25.
With the number of women drivers on the roads of the UK now outstripping the number of male drivers, this ruling will be seen as a boon by most underwriters.
Traditionally actuaries have always priced young male drivers car insurance at a much higher rate, due to statistical evidence showing that they are more likely to be involved in more accidents and make more claims than their female counterparts. There is no evidence to show that any insurers will pass any additional premium income onto this group in the the form of cheaper cover. Just because the women are paying more now, it doesn’t follow that the current risk prices for men will be reduced as gthe risk has not changed.
Cheaper premiums for men are unlikely except in the odd competitive instance where certain companies will seek to increase market share, take on more risk and offer cheaper introductory premiums.
The equality of gender, which is the removal of gender as a premium discount and a rating factor for base rates from the pricing of insurance, will also help facilitate the more rapid introduction of so called ‘Usage Based Insurance Products’, much touted as the future of all insurance products, where car insurance is priced by the risk defined for the individual by the implementation of black box technologies and telemetrics. These remotely assess the driving skills of the individual and charge accordingly on an ongoing basis.
For many young female drivers, particularly in large urban conurbations, having one of these personalised products, with all it’s questions of civil liberties, may be the only cost viable solution to obtaining cover as women’s car insurance is confined to the dustbin of history.
Evidence is already beginning to emerge and predictions being made about the size of the existing women driver market shrinking dramatically as the marginal costs of increased premiums for women make driving uneconomic and in possibly many thousands of cases in the UK, not possible on already stretched budgets and structural debts.