Friday 21 December 2012

EU Gender Directive for insurance sales

In order to comply with an EU ruling, from 21st December 2012 insurers will no longer be able to price insurance and annuities on the basis of gender. Females have traditionally been considered a lower risk to insurance companies and have therefore generally paid less for their insurance, but the EU Gender Directive has ensured that this can no longer happen.

Following the March 2011 European Court of Justice ruling that such practices were unfair, insurance premiums must now be calculated on a 'gender neutral' basis.

The new ruling will only affect policies taken out on or after the 21st December 2012 or renewals after that date.

The AA has warned that young women will see the biggest increases in the cost of their premiums, with some rising by up to 30 per cent. Young male drivers, who are statistically much more likely to be killed or injured in a car accident, could make savings of up to 10 per cent on the cost of their policies.

But the AA also stressed that not everybody would see such marked changes in their premiums and that, while it feels the new directive is unfair, it has "led insurers to re-assess how they take other aspects of risk into account - such as age, occupation and post-code, as well as the model of car driven".

Director of AA Insurance, Simon Douglas, said: "Not only is this [re-assessment of aspects of risk] happening at a time of falling car insurance premiums, which means that the differences will be less pronounced than they might otherwise have been, it also anticipates legal changes, including measures to control whiplash injury claims, that will take place in April which in turn will reduce insurer costs."

The Association of British Insurers advised consumers to shop around for the best possible price. It said: "Insurance is all about matching price to risk. We have opposed the gender ruling on behalf of our customers, as it goes against this principle. Although insurers can now no longer take gender into account, they will continue to look at other relevant risk factors to ensure consumers benefit from the most competitively priced insurance. The insurance market will remain competitive and customers should continue to shop around to get the right policy at the best price."

More about this here   Source OMG & Cannon Moorcroft

No comments: