In December 2012 the EU introduced controversial new rules insisting that car insurance companies no longer discriminate on the basis of gender. Until then, men were being routinely charged more than women, but after the European Court of Justice ruled that different premiums for men and women purely on the grounds of sex “were incompatible with the principle of unisex pricing included in EU gender equality legislation”, they had to go – even if it meant women would have to pay more as the gap between the sexes closed.
But what has happened since the rules came into force? Instead of the gap between men’s and women’s premiums narrowing, as expected, it has actually widened. In 2012, men on average paid £27 more for a car insurance policy than a woman, but rather remarkably they now they pay £101 more – nearly a four-fold increase.
These figures are based on an analysis by Confused.com, which collects 4m quotes every quarter from British drivers looking to arrange their insurance, so one assumes they must be right.
So is this a case of an EU ruling spectacularly backfiring? Of well-meaning but deluded gender warriors in Brussels interfering in places they shouldn’t – and then shooting themselves in the foot? “It’s just equality gone mad” was the sort of comment that greeted this ruling when it was introduced.
So what’s going on here? First, it’s doubtful that the insurance companies are simply ignoring the EU ruling and breaking the law. It’s pretty simple for people like me to test this, by changing my name from Patrick to Patricia on an internet quote engine and seeing if I get different results – and I don’t.
What appears to be at work is that car insurance companies set a price very much according to all the other data they can find on you – without actually asking your gender. So the quote you get back reflects the risks attached to your occupation, how much you drive, the sort of car you drive and whether you have made any modifications to the car.
I asked Confused.com to explain the worsening premiums for men, despite gender equality. It said: “The continuing disparity between men and women could be linked to the fact that certain male-dominated occupations may have a poorer claims experience.
“Also, on average, men may tend to drive larger and more costly vehicles. The more expensive/high-spec the vehicle, the more likely it is that the cost of repairs will be higher, and therefore this is reflected in the premium charged.”
There was a separate report from Moneysupermarket.com earlier in the week which revealed the occupations with the worst rates of drink- and drug-driving. Eight out of 10 of the worst are in the building trade, with scaffolders the worst. On average they have to pay an extra £470 for car insurance following a conviction.
On the other side of the equation are midwives, an occupation the least likely to drink- or drug-drive. Now I don’t want to be accused of sexism, but most scaffolders are probably men, and most midwives, women.
Kevin Pratt of Moneysupermarket.com says: “Women tend to drive fewer miles, have fewer accidents, the accidents they do have are less serious, and they have fewer convictions for drink-driving.
“Insurers don’t look at gender, but they will look at all these characteristics very carefully.”
My conclusion is that the EU ruling has done women a favour. Before, insurers bluntly charged you a bit more if you were male, a bit less if you were female. Now they have to price it according to rather more concise data reflecting your individual driving behaviour.
My guess is that women were actually paying too much before the ruling and are now paying premiums that more accurately reflect their risk.
Car insurance may have become less equal. But it is more fair.