December 2012 is a time of change. Nothing to do with Mayans and calendars and all that, but the European Court of Justice (ECJ) has ruled that from then on gender can no longer be used as a factor when car insurance companies work out how much you pay. Although this is a step forward in terms of gender equality, it also means that premiums for both men and women will be affected, with lady drivers coming off worse.
Why worse off?
Well, it’s all to do with insurance risk statistics. For years women have enjoyed much lower premiums than men due to the insurance data that marks them out as significantly safer drivers. Ninety per cent of motoring offences are committed by men, and women tend to have less expensive accident claims too. These statistics have helped to give female drivers a well-deserved discount on their premiums, but now those statistics can no longer be used to work out how much you pay. As these rates begin to equalise, women will have to pay more for their car insurance (in the case of young female drivers, up to 30 per cent more). The equalising of rates also means that male drivers will likely receive a discount on their insurance, since the stats working against their gender will also be removed.
Dodge the bullet
With gender out of the equation, car insurance companies will have to look at other factors to make up a more accurate risk profile for their customers. This means that they could start putting more emphasis on certain other factors such as your occupation and the type of car you drive. Some have speculated that this will result in car insurance companies managing to dodge the bullet by offering discounts for cars that are statistically more likely to be driven by a woman or on an occupation where there are a high number of female employees. Whatever happens, the first few months or even years after this ruling takes effect will likely see car insurance prices going all over the place as insurers try to find the correct balance of rates.
What can you do about it?
It’s a tricky one. Since no one really knows how much premiums will be affected by the ruling there’s no hard and fast rule. Those of you who are lucky enough to have your renewal date just before the ECJ ruling hits should mean that you’ll be able to enjoy another year free from these price hikes, as insurers won’t be able to change your rates suddenly once you’ve paid your premium. For the rest of you, it’s a bit of a gamble. Do you pay the cancellation fee and get a new policy in order to avoid any price increases, or do you let the chips fall where they may and renew as normal?
It’s going to be a crazy few months after the ECJ comes into play, so make sure that you’re not walking blind and taking whatever premium you’re given. Keep looking for a better deal, at least until the insurers find their feet.