Car insurance

[JellySlice]

Insurance premiums are based partly on your perceived risk as a driver. There was clear evidence that male drivers were more likely to have a car accident than female drivers, so women were generally offered lower premiums. Some years ago it became illegal to offer women cheaper car insurance than men.

Why?

I think EU ruling made it illegal, didn't it?
I think often the insurance pricing teams get round it in other ways. For example, they will make the premium less for a car which is generally driven by women, or they'll try and advertise in places where women will see.

Yes. The EU did for polities like “Sheila’s Wheels”.

I think the same equalities rules forced convergence of retirement age.

Convergence of the retirement age made sense. Setting the age of retirement is fairly arbitrary, and there is no reason to differentiate between the sexes for arbitrary decisions. As I understand it, the 60/65 retirement was based upon the average age difference between wives and husbands, and was sexist because it was intended to ensure that the husband had someone to look after him when he retired.

But the evidence of who has car accidents is not arbitrary. Drivers under 21y have more accidents than 31yo drivers, so young drivers have higher premiums - why is this not illegal age discrimination? Similarly, drivers in their 80s+ find that their premiums are increased due to the increased risk of accidents - why is this not illegal age discrimination?

I can't help but wonder whether this EU ruling was an early step in erasing women by making it illegal to recognise genuine differences between men and women.

I can't help but wonder whether this EU ruling was an early step in erasing women by making it illegal to recognise genuine differences between men and women.

I honestly don't think that's where it comes from. I have a little familiarity with this as I work in insurance and the Test-Achats case was big news at the time.

I think price discrimination for products and services on the basis of sex was banned across the EU, but an exception was made for insurance on the basis of statistically justified differences. So, as you say, insurers had data to show 20 year-old males will have higher motor claims than 20 year-old females. But the case ruling then said you couldn't charge them differently - or at least made it technically hard to justify with statistics. (Incidentally, Sheila's Wheels still exist and our house insurance is with them - even though I'm no Sheila and I'm not insuring my wheels ).

It went the other way for annuities. Because women live longer (and we use sex-based data to measure that because our insurance business relies on it), we used to offer them a lower income on their pension pot compared to a man. Now men and women get the same rates, so women are getting a better deal on average (will get the same income for more years).

But the case ruling then said you couldn't charge them differently - or at least made it technically hard to justify with statistics.

Could you explain?

"(Incidentally, Sheila's Wheels still exist and our house insurance is with them - even though I'm no Sheila and I'm not insuring my wheels)."

I assume that Down Under "Trans Sheilas are Sheilas" so it would all be down to identity anyway.

I used to like the corny ads.

Could you explain?

Bear in mind this was eight or more years ago, the arguments were more legal than actuarial, and I just work with the practical implications of gender-neutral pricing, so I may be a bit hazy on the details...

I just read this as a bit of a refresher: www.cliffordchance.com/content/dam/cliffordchance/briefings/2011/03/client-briefing-on-testachats-case-judgment.pdf
(By the way, reading it back, it's interesting how sex and gender are used interchangeably, but without any contortions about transgender, seeing the world as made up of men who are male and women who are female - goodness knows how it would be interpreted today).

So, EU allowed an exception to gender-neutral pricing for insurance, and the court ruling was basically that you can't have an exception which has no time limitation, so EU Commission had to lapse that particular exception.

There was then talk at the time whether the Commission would introduce something in its place that would allow differential pricing on the basis of actuarial evidence, but nothing came of that as far as I recall.

But I think there was debate about whether there is anything inherent in male / female biology that makes women less risky as drivers, or whether male / female correlates to something else - in which case, motor insurers should be underwriting on the basis of that "something else". For example, if what makes "boy racers" risky is that they go out more at night and drive fast on country roads, then what you should rate on is how much a driver goes out at night and what sort of roads they drive on - I believe that's where those car tracking devices are a selling point, where the insurer will charge your premium on the basis of actual driving experience. But I don't work in motor insurance, so I'm not sure how that's working in practice.

In my area (annuities), there was some debate over whether women's longer life expectancy is down to biology or some other correlate, but for selling annuities I think the industry has just come to accept the use of unisex rates. When we set out reserves, we do take account of sex, because the data shows us females live longer and it would have significant financial implications if we ignored the sex-based distinction. (If there's evidence that if I put on a dress, take some hormones and call myself a woman, then I'll live longer, then maybe I should consider it ).