Last Year for Sex Discrimination over Insurance; Shake-Up Ordered by the EU Will Send Women's Premiums Rocketing

Article excerpt

Byline: Stephen Womack

MEN and women will have just one year left after Wednesday to renew or buy new insurance according to their sex. Policies taken out from December 21, 2012 must be 'gender-neutral' and offered at the same price.

The change is being ordered by the EU, even though the Government and insurers object, and there are fears it could see premiums soaring for women drivers.

Financial Mail answers the key questions and highlights the winners and losers.

Why are the rules changing?

INSURANCE is currently exempt from international laws on sex discrimination. But in March the European Court of Justice ruled in a case bought by a Belgian consumer group and decided this exemption should end. This ruling is binding on British law.

As Financial Mail reported at the time, this has left insurers and consumers facing the biggest prices shake-up for a generation. Malcolm Tarling, spokesman for the Association of British Insurers, says: 'We think it is irrational and many consumers will be worse off, but what is done is done.'

The Government this month finally gave details of how the new rules will be implemented.

After the original court case there were concerns some insurance already in force might have to be changed, but the Government now says policies taken out before December 21 next year and continuing after that date can still operate with different prices for men and women.

What types of insurance are affected?

GENDER has the biggest influence on motor insurance because younger men pose a higher risk than younger women. With life cover and annuities, greater female longevity is a factor.

But the ruling will apply to nearly all types of insurance involving people. Gender is used to price health and critical illness cover, and to a lesser extent household and travel insurance. Pet cover is not affected.

What could happen to premiums?

THE Treasury estimates that women drivers aged up to 45 will pay a total of [pounds sterling]920 million a year more for their cover while men in the same age group will collectively save [pounds sterling]620 million.

The biggest impact is on younger drivers, with women under 25 likely to see annual premiums jump by a quarter while men of the same age will see their much larger premiums dip by about ten per cent.

Women in their late 20s might pay 18 per cent more for cover while those in their early 30s could pay an extra ten per cent. By 45, the impact of the ruling is negligible as rates for both sexes are virtually the same.

Julie Addis-Fuller, 35, a risk manager for an accountancy firm, is concerned that the new gender laws could see her car insurance premiums rise dramatically. …