Car insurance: why women face £300 rise in premiums

Car insurance: An EU ruling means insurance companies must end gender discrimination, and female drivers under 40 will be hit hardest
Testosterone-fuelled young males are, all the statistics suggest, a danger on the road. Thrill-seeking young men are prone to drive too fast, late at night, and cause horrific fatalities. Young males are 10 times more likely to be killed or injured than a driver aged over 35. The typical insurance claim by a young male adds up to around £4,500, compared with £1,200 when the driver is middle-aged, whether male or female.

It’s the main reason men pay around 40% more than women for car insurance until the age of 40, when accident rates and claims tend to equalise between the sexes. Yet from 21 December, insurers will be banned from taking gender into consideration when setting premiums – and women will pick up the tab.

According to the AA, the typical insurance premium for a male aged 17-22 is now above £3,000, while for a female it is £2,125. Men aged 23-29 pay an average of £1,840, compared with £1,200 for women. Only once men reach the age of 40 do their premiums come down to the same level as women (at around £700-£750).

What will happen when the directive comes into force?

According to Gocompare.com, Britain’s women are in for a shock. Most are unaware of the ruling and the huge impact it is likely to have. Gocompare’s head of motor insurance, Scott Kelly, says: “We expect to see premiums equalised at the higher male rate rather than the lower rate for females. If that is the case, women drivers will see their premiums rise by just over £300 on average, but for younger age groups the increase could be as much as £2,000.”

The scale of the premium increase – on top of the inflation-busting rises of recent years – means some young women who do not have to renew their insurance until January may save money by terminating their policy before the year end and starting a new one before 21 December.

But for older women, as Michael Winner might say, it’s a case of “calm down, dear…” Unisex insurance rates will have virtually no impact on men and women above 40-45 as they are already treated as near identical risks at that age. Indeed, there may even be a very small bonus: the AA’s figures suggest that women over 50 pay about £10 a year more in car insurance than men, so they may be in line for a small reduction. Young men will also benefit, with estimates that they will see 10% or more clipped off their premiums.

For now, the major insurers are silent about how they will price their policies for the unisex era. Money asked Direct Line and Aviva for quotes, but they refused to give specific figures, citing competition reasons.

Aviva would only go so far as saying: “Young males are likely to see their premiums fall, and young female drivers are likely to see their motor premiums rise.” At Direct Line, Gus Park, director of motor insurance, said: “We were disappointed with the ruling, but now it is going to become law we’re focused on minimising the impact of the gender directive. It’s hard to be sure what is going to happen to prices within the market. Many customers will not be adversely affected. However, people shouldn’t panic; they should wait for their renewal quote from their insurer and contact them if they have any concerns.”

Many people will be justified in asking why the insurers don’t just split the difference, with male and female insurance rates equalising halfway between the current rates. But Kelly explains: “If a 20-year-old male is being correctly priced for the risk he presents, then the insurer won’t want to charge less than that. Instead, women will have to be charged more.”

End article.

Had an accident that was not your fault? Want your car fixed without affecting your insurance renewal premium or no claims bonus? Click here and start your claim today.

Save