EU: Insurance Premiums Based On Risk Are ‘Discriminatory’

Another day, another interfering decision from the European Court of Justice, which has now decided that insurance companies can no longer offer women lower car insurance premiums than men because of their gender, as this breaches European equality laws. Also in the frame are pensions and life insurance, the pricing of which has always been influenced by gender, as women tend to live longer than men.

Up until now, insurance companies have included gender in their pricing system, based on an accurate statistical analysis of risk, driving offence rates, life expectancy and other relevant factors. All of this goes out of the window, however, as such common sense pricing is apparently discriminatory.

Of course, it is discriminatory – in just the same way that it is discriminatory to prevent a four-year old from handling a kettle full of boiling water but to allow a ten-year old to do the same thing freely. It is a simple reflection of reality, which does discriminate between age, gender, physical and mental abilities and many other aspects of human nature.

Historical statistics show that young male drivers cause more accidents than young female drivers. Similarly, at the other end of their lives, women tend to live longer than men. Consequently, up until now, women have paid less than men for car insurance and life insurance, but more for pensions.

Equality enthusiasts say that this decision is good news, since it is unfair to discriminate against male drivers because of the poor behaviour of a percentage of them. I would disagree and say that this ‘discrimination’ is actually just sensible risk analysis and makes good sense, in the same way that charging skiers extra for travel insurance makes sense – because the risk of a claim is higher.

The outcome of all of this nonsense is that from December 21st 2012, insurance companies will have to stop discriminating based on gender differences. The insurance industry reckons that this will mean that car insurance premiums for men will fall by about 10% and those for women will rise by about 20%. Women will effectively be subsidising the poor behaviour of young male drivers.

Whether this happens, or whether insurance companies find a way around the issue, remains to be seen. There is also the possibility, of course, that premiums for women will increase and those for men would stay the same…

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