Is it sexist for the insurance industry to take gender into account when setting its premiums?

[Lio]

You've probably seen article like this one in the last few days, talking about how women could find insurance premiums (particularly car insurance) going up if the EU rules it discriminatory to take gender into account when setting its premiums.

A friend has asked whether this is discrimination against men, or just sound business sense? I've always thought the latter, given that the stastistics show that women have fewer car accidents and less spectacular ones than men. But if someone is told that the reason their premium is higher because they're a man, isn't that sexist?

I know there are other issues involved, such as age, but what do you think about the gender one?

I'm just really keen to know whether the people on this thread who want sex taken out of the equation for motor insurance, want it taken out of the equation for annuities.

And if not, why not?

I am going to bed soon though.

Finding this really interesting

SardineQueen - I think that if a type of discrimination is considered unacceptable by society - and is prevented by law in some areas then it should also be in other very similar areas.

Yes, car insurance for women would go up (and men down) if we didn't discriminate. But I don't think it would spell the end of for-profit insurance, any more than equality employment laws put all small companies out of business.

Surely rather than discriminating on a protected characteristic, insurance companies should ask for more relevant details instead.

So, going back to the example of the gay man looking for health insurance, it is illegal to charge more just because he is gay and therefore at greater risk of HIV. Instead, the insurer needs to ask about relationship status and safe sex and get to the root of the issue. Surely everyone agrees this is the right way to go.

Same with race and health insurance. You cannot charge someone more based on race but you can ask about specific diseases that are more prevalent in certain groups. Again, sounds fair.

Surely, we should go the same way on sex. If women are less likely to suffer from certain health issues, is it because they are women or because they don't drink too much, eat heathily and are less likely to smoke? If so, just ask those questions instead and price health insurance and annuities on that basis instead?

Same with driving. There are other questions you can. So DH has never had an accident in 20 years of driving. He's naturally quite risk averse. He's an accountant too. His profession is a good indicator of his risk aversion. His lack of accidents is probably related to his aversion to risk.

For age, why not use years of driving experience instead? I don't that was a factor at all when we last renewed our car insurance, but surely there's a correlation here.

The only example I can think of where this doesn't work is where the protected characteric is a cause of the higher payouts. I'm thinking that someone with a disability is likely to have higher health care costs as a direct result of their disability.

oops, sorry, got carried away with the surelys

The sexual habits issue only applies in the situation of a homosexual man looking for health insurance and I think that is the law as it currently stands. Certainly a gay man can't be denied insurance or charged more simply because he's a man, the insurer has to ask follow on questions if they want to go down that route.

I don't see any need for intimate questioning in any other scenario. Your profession and how long you've been driving are fairly inocuous and easy to prove if anyone is tempted to lie.

simply because he is a gay man, obv

Insurance premiums are based on vast amounts of data that is analysed by actuaries and then set based upon the risk and hazard involved.

Factors for car insurance will include:

• address
• type of car
• gender
• age of driver
• loss history
• value of the car
• type of cover required

Not sure how statistical data can be considered sexist.... Women tend to gave lower rates as statistically then tend to make fewer or cheaper claims. Likewise older or more experienced drivers have lower premiums and those living in "safer" areas will also tend to have lower premiums as statistically they are less likely to have their car stolen. Similarly the value the car will impact the premium - generally if you have a higher value car, your premium will be higher.

Insurance companies are businesses that are there to make money for their shareholders. They are not there to make political statements.

We have a whole lots of protected characteristics (sex, race, sexuality, age, disability). The reason why they are protected is because they are individual characteristics that have no bearing on, for example, ability (as an employee) or need (as a consumer).

So when I go for a job interview, the recruiter cannot assume that as a woman, I won't be able to work long hours as I have childcare considerations. Instead they have to ask the relevant question. So, the employer needs to ask if am I willing to work long hours and if there is anything preventing me from doing so. To assume I can't because I am a woman is wrong and lazy even though there is a correlation between being a woman and being able to work long hours.

All this is doing is asking insurance companies to do the same. Why shouldn't they put more thought into where their risk actually lies rather than taking a lazy route that an employer can't?

Using sex is just using a genetic marker that is visible to the naked eye and in virtually all correspondence though. To some extent this is why I'm emotionally against it. It's really lazy. I wonder how comfortable our society would be if it were just young white men who were the really high risk group and insurance companies decided to charge all young white people more instead of all young men.

Genetic screening for insurance would really change the game I think and might force governments to legislate aggressive. The insurance industry would be much less of a public benefit if you only the unlikely to need it could get it. Part of the benefit of insurance for the public is providing private safety nets that spread risk. Less public benefit if most of those who will succomb can't get coverage. At the moment refusing to screen makes them very vulnerable to high risk individuals skewing their exposure because people can get tested and the high risk ones buy coverage. It's very tricky.

On the annuities front I certainly think the use of sex there is used as a huge proxy for lifestyle choices. Women live longer in general but how much of that is down to their biology is really questionable. They smoke less, drink less, are less likely to be overweight and don't tend to work in some industries linked with earlier death (though they do tend to be poorer than men). Would be interesting to see annuity rates that looked at lifestyle over sex.

An employer can vary how much they pay you. But again, not on the grounds that you are a woman but certainly according to how hard you are willing to work (legally anyway).

Sorry, I still don't see the difference.

BTW, I don't think that this really does benefit women as it's only on car insurance that women see a lower cost. Buying a pension annuity costs way more as a woman and that's likely to be a much bigger expenditure (unless of course you don't have a pension, which many women don't but that's a different issue).

karma the difficulty is that the main group who are attracting the high motoring premiums are young male new drivers.

I agree that things like claims experience and motoring convictions (speeding) and even job will help with pricing for many people and that's how it works. The difficulty with young drivers is that they have not been insured before, they haven't been driving long so won't have convictions (I'm sure it would be an instant decline if they did) and their job is more often than not "student".

So when you have an applicatoin from a 17yo student with no "no claims" history and no conviction history, how do you set about deciding whether they are any good or not?

I imagine many of the crashes are due to - lack of experience, speeding, showing off, maybe driving under the influence. The lack of experience is a given - the rest - how can you find out how people do those things short of stalking them? And that would be really expensive.

At the moment the data shows that young male drivers generate a statistically significant level of claims. So that is used. The industry are always keen to find better ways of working out who is a risk and who isn't - if there was a better & cost efective way of doing it I think they would have thought of it.

Are people also going to demand that annuity rates meet in the middle as well? No-one is answering that question.

If it is the case that people want to see sex taken out of the equation when it disadvantgaes men, but left in when it advantages them, then that is sexist and surely you can all understand why the industry couldn't pick and choose like that. Either its OK to use or it isn't, across the board, I reckon.

Could an insurer not assume that everyone with a year's driving experience or less was expensive as they had no history to prove otherwise? I learnt to drive when I was 30, and was automatically assumed to be cheap, but I think I was very high risk. Our insurer simply didn't care that I had only just passed, which seems crazy.

Re speeding for the 17yo, yes they don't have a long history but maybe the insurer could take speeding incidents per year driving. So an 18yo with three speeding fines is more expensive than a 60yo with three tickets.

Showing off, I don't think you can measure. But some men don't show off and some women do so sex isn't a measure either.

Driving under the influence. Don't think you can measure directly, but maybe you could ask about drinking habits. I know it's not fool proof, but it works well enough for health insurance.

For the annuities, I think that providers need to ask the relevant questions (eg lifestyle factors etc) rather than relying on sex. I don't think that rates would meet in the middle. I think that women would still be charged more for annuities on average but not because they are women but because they generally look after their health.

If insurers can prove that a protected characteristic is the real issue, rather than using it as a proxy for something else, I'd be willing to go with it in specific circumstances. But I think the onus needs to be on insurers to demonstrate that it really is the determining factor, rather than something else that is not a protected trait.

Bugger don't mean that. Of course you can't use age. Doh. Years driving experience I mean.

most car insurance seems to be very expensive unless you have some no claims discount - I think you were lucky there korma!

On the speeding - I doubt that a very new driver with any speeding fines would be able to get insurance at all TBH. That's just put the risk off the charts!

On all of this you have to balance with what people will put up with. So people are unlikely to be happy to go along for a battery of blood tests, go out on the road with a driving examiner for their insurance, that sort of thing.

Your idea about drinking is problematic with this insurance. For life insurance (eg), if you say you don't drink, and then die of something like liver chirrosis, and teh coroner links it to alcohol, then the insurance company don't have to pay. If a driver gets pissed and runs a load of people over - then the compensation (public liability (?)) does have to be paid. I'm pretty sure. So they couldn't say "aha you lied about your drinking habits so we're not paying" it wouldn't work.

For annuities you could use different things - but it would mean sending each pensioner for loads of medical tests and screening. You couldn't ask them the questions as lots of them would know what to say (sounding unhealthy would be key!) and you pay the annuity and you can't just stop when someone gets to say 80 and say "we thought you'd be dead by now that's what we based our sums on".

Thinking more you would have a situation where people were effectively rewarded for poor lifestyles - at a very literal and individual level. And poor miss bloggs the nun whose never smoked and exercised every day will get a pension of £1 a month because they expect her to live to £120. Actually I don't think that's very fair either.

So a lot of this is a balance. Moving too far towards a really personalised price seems actually quite unfair as it also penalises people for things they have no control over (eg genetic predisposition to breast cancer I think this already happens in medical underwriting) and also sometimes has the effect of "punishing" people for doing teh right thing

I do think that there are new ways of pricing all the time and each time lots of questions are asked. The effect isn't always what you might want and these companies are there to make a profit, they're not there to be nice to people.

Personally I think that if you remove sex from motor premiums then logically you need to remove it from all ther others - I mean either its OK or it isn't, on principle. And if you're going to do that you need to understand what the consequences are in an industry that is not really on "our" side, they are there to make a buck.

Also remember that the more tests you have and the more detailed the risk assessment is, the more expensive it is, and the less teh insured then gets for their money.

So the effect of testing all the pensioners would mean less actual pension money for them.

PLus it sort of stops being isnurance if they more or less know what the answer is.

It's all very difficult but an interesting challenge to those in the business I guess.

On all of this you have to balance with what people will put up with. So people are unlikely to be happy to go along for a battery of blood tests, go out on the road with a driving examiner for their insurance, that sort of thing. > Thinking more you would have a situation where people were effectively rewarded for poor lifestyles

Your idea about drinking is problematic with this insurance. For life insurance (eg), if you say you don't drink, and then die of something like liver chirrosis, and teh coroner links it to alcohol, then the insurance company don't have to pay. If a driver gets pissed and runs a load of people over - then the compensation (public liability (?)) does have to be paid. I'm pretty sure. So they couldn't say "aha you lied about your drinking habits so we're not paying" it wouldn't work.

PLus it sort of stops being isnurance if they more or less know what the answer is.