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EU gender ruling – could your insurance premiums rise?

A quarter of Britons are unaware of the upcoming EU gender ruling banning insurers from taking gender into account when calculating premiums, according to research from the AA.

The ruling from the European Court of Justice comes into effect on 21 December and is likely to affect car insurance premiums, annuities and life insurance products.

According to the AA, women are least likely to be aware (29 per cent) of the change, despite being the most likely to see their premiums increase. The middle aged and above are least likely to be affected.

At present, women’s premiums can be up to 40 per cent cheaper than their male counterparts. The ruling however, made in March 2011, could increase female premiums by 25 per cent or more.

Premiums have often been dictated by risks linked to gender, with women typically benefiting from lower car insurance premiums because of lower accident rates and men tending to receive higher annuity rates because of shorter life expectancy.

Director of AA Insurance Simon Douglas said: “Calculating premiums based on that risk is fair and it works, but it has been abandoned in favour of gender equality.”

“For many years, insurers have charged young men much higher premiums than young women because they are so much more likely to make expensive insurance claims,” he explains.

“But as they get older, the difference between men and women in the number and cost of claims they make reduces and from around age 40, men and women pay similar premiums.”

Otto Thoresen, director general at the Association of British Insurers (ABI) said: “Insurers and the UK Government fought for nearly a decade to retain the right to offer premiums and benefits priced as accurately as possible by considering risks linked to gender. But now that the battle is over, the industry is focused on preparing to give customers ‘gender-neutral’ rates that are as fair as possible.”

Insurers are predicting an overall price hike in 2013 as a result of the ruling, although it is likely to level out as the rule settles in.

Those expecting to renew policies in the next couple of months are advised to take advantage of lower rates before insurers convert to gender-neutral policies.

It may also be beneficial to check with insurers about their guaranteed quote period; some insurers for instance may offer a pre-gender neutral quote for 20 days after the day of application.


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