In 2011 the European Court of Justice delivered a judgement that meant that, from 21st December 2012, insurance companies must treat men and women equally for benefits and premiums. Up until now insurance companies can differentiate between the sexes providing they could show statistical evidence to support their decisions.
What's the current situation on insurance premiums?
Typically young men have been paying much higher car insurance premiums due to data showing them having much higher claim rates. On the other hand, women have been receiving lowers incomes, when buying an annuity, due to the statistics showing they, on average, live longer.
What will happen to premiums from 21st December 2012?
- Life insurance - women are likely to pay around 20% more for life cover, men will see around a 2% reduction
- Income protection insurance - currently female rates are around 70% higher than male. Under gender neutral pricing males will see a significant increase in premiums and females will pay less
- Annuities - statistically women live longer than men so their annuity rates have been lower, this will no longer be the case with annuity rates being equal between sexes
- Motor insurance - Data shows that young males under 22 years of age are ten times more likely to make a claim than females of the same age. Females are likely to see a significant increase in premiums of as much as 20% while males may see a reduction of around 2%
Should I take out a policy ahead of the changes?
Clearly, if the pricing changes are in your favour it would be a good idea to commence a policy now rather than wait until after 21st December. However, industry intelligent suggest that 30% of life insurers and 14% of motor insurers have already moved to gender neutral pricing ahead of the deadline. You also need to be aware that if you have obtained an insurance quote recently it is likely be invalid beyond the 21st December.
