Important News from the EU Regarding Women’s Car Insurance

The European Union has recently dropped its controversial directive aimed at standardising car insurance premiums across the gender divide. Immense lobbying of the UK Government from the Association of British Insurers and Financial Services Authority stressed that the effect would be disastrous for the car insurance industry and threaten the centuries old risk-base system to assess an individual based upon proven fact. Callum McCarthy, chairman of the FSA, said that "the effect will be, in all cases, to require insurers to depart from realistic assessment of risk. The effects of departing from realistic assessment of risk would be various - sometimes they would advantage men, sometimes women".

The current system favours women drivers who for many years have been proven to be a safer risk than their male counterparts by making less car insurance claims. In the case of men who retire, for example, they can secure a higher retirement when purchasing an annuity because their average life span is shorter. Regardless of gender, if the EU directive had succeeded it would have introduced a flat-rate system for all insurances where low claim risk individuals are not rewarded and pay more to cover higher risk individuals. The net result would have meant large car insurance premium increases for everybody across the board as insurance companies re-evaluate their risk assessment systems.

In the end, despite the European Commissioners expressing that the differential pricing structure was discriminatory, the vote was rejected by the UK, France, Germany, Italy, and Spain which means car insurance is excluded from the new EU gender directive. Those countries in favour of the directive included Denmark, Sweden and the Czech Republic amongst others. The new EU gender directive should come into effect in the summer of 2005.