Women drivers will pay more for insurance in future

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Confused.com is encouraging young female drivers to take a minute to compare prices on new motor insurance cover before March 1, 2011 when the EU Gender Directive ruling will be published.  The ruling will result in a decision of whether or not insurers can charge different cover premiums based solely on gender and will lead to massive changes in cover if it is approved.  Most likely, female drivers will see their insurance premiums heighten if the premium is passed through by the EU to absorb the price differences between them and their male counterparts.

Kevin Chidwick, the chief executive of Confused.com stated that if the ruling that stands right now is overturned then insurance providers will not be able to offer different genders different premium rates which currently mean that females pay less than males.  He explained that it is a fact that young male drivers statistically cause more incidents that result in injury and death which is why their premiums are higher.  However, if the ruling is overturned the prices will rise for female drivers as they will see their rates rise to subsidize the high incident rates of males.

Because insurers will no longer be able to take gender into account, their overall approach to setting premium prices is likely to become more cautious as the effect of the change beds in. Based on its own car insurance index, Confused.com recently reported a 38.2% rise in the average premium over the last 12 months and it’s likely that drivers of all ages will be hit with further rises if the change is agreed.

In particular, young female drivers are likely to suffer. Women drivers aged 17-20 saw a 37.5% increase in premium price during 2010, making the average policy for this group £1,694. Despite being £999 more than the average female premium across all age groups, it’s over £1,200 less than males the same age – men aged 17-20 pay on average £2,976 for an annual fully comprehensive premium. As age increases the differential between male and female prices decreases, meaning it will be younger drivers who can least afford it that suffer the most.

As Confused.com recently explained to the transport select committee enquiry, further rises in motor insurance for young drivers would have implications other than just those on their immediate finances.

“It’s possible that more young people will decide to drive without insurance if their premiums continue to rise,” continued Kevin. “Un-insurance is typically most prevalent in young drivers, with drivers under 26 being 11 times more likely to have a conviction for driving without insurance from the last five years compared to the over 60 age group.

“Although the ruling could go either way, if the current rules are overturned prices could change overnight, so anyone looking to take out or renew a premium should shop around and secure a deal without delay. It will be a real blow for the industry if consumers suffer further price rises to cover the costs of young men who statistically cause more accidents and make higher value claims”.

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