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Young women to pay the price of insurance equality

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March 2, 2011
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The European ban on using gender to rate insurance premiums is bad news for younger female drivers, with rises of up to 50 per cent for some car insurance policies widely expected.

A 2004 EU directive allowing insurers to use gender to rate premiums if they were backed by statistical evidence was successfully challenged last year, leading to this week’s decision to scrap the exemption.

That statistical evidence certainly exists, with young men twice as likely to claim on their insurance policy than young women, while they are 10 times more likely to have a road accident involving serious injury, which is where the most costly claims occur.

But the courts have decided that equality cuts both ways, and from December 21 next year, gender cannot be used as a risk factor.

It takes away one of the fundamental principles of insurance, and there have to be fears that there will be more challenges in the future based on other discriminatory risk factors, such as age.

With gender stripped out, it’s likely that premiums for female drivers will increase to match those of male drivers, which won’t drop because of the difficulties most insurers are having making money on men.

Some, if not most, insurers will look at ways of discounting which will catch as many women as possible by using proxies such as occupations.

It means the odd male secretary or nursery assistant will end up with cheap insurance but, as 95 per cent of these positions are filled by women, then insurers can continue to attract female customers and can prove that they’re not rating based on gender.

The big losers will be those women working in traditionally male-dominated occupations, or where the gender/occupation split is 50/50.

There are, of course, ways of reducing insurance premiums, some more hi-tech than others.

The most obvious involve the basics, like getting a PassPlus or Institute of Advanced Motoring qualification, keeping your car garaged if you can and installing the best alarm system you can afford.

Members of owners clubs can get discounts of up to 15 per cent on some schemes, while limiting the mileage to a few thousand miles a year will also reduce the premium.

More and more fleets are now using telematic devices that measure the mileage, but also the driving styles, such as braking, accelerating and speed, in real time.

This benefits the fleet managers in terms of improving efficiency and reducing accidents, which in turn often leads to discounts on fleet insurance.

There have been “black box” insurance schemes on private cars for some time, but some of them place heavy restrictions, such as curfews, on drivers, and have therefore had limited appeal.

However, with the way premiums have increased in recent years for young drivers, these devices are likely to be seen more and more.

They are unlikely to be compulsory for some time yet, but we may reach the point that most young drivers have them because it will be so much cheaper in the long run.

Using the technology, good drivers can be rewarded with things like extra mileage allowances or larger discounts.

Your choice of car will also play a major part, so we’ve put together this list of the top 10 insurance friendly cars for young drivers:

Volkswagen Beetle (old shape, up to 1600cc)
Peugeot 107 1.0
Vauxhall Corsa 1000cc
Peugeot 106 1000cc
Fiat Panda 1000cc
Austin Mini 1000cc
Fiat Uno 1000cc
Peugeot 205 950cc
Renault 5 1000cc
Citroen 2CV 602cc

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