Azara Blog: European Commission insurance ruling

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Date published: 2005/01/10

The BBC says:

A proposal which would have made car insurance more expensive for most women drivers in the UK has been dropped by the European Commission.
Insurance firms offer different rates for cover based on gender and, as male drivers commit 85% of serious motoring offences, women usually pay less.
The EU Gender Directive would have made insurers treat both sexes the same.
But a deal allowing insurance firms to take gender into account when setting charges has now been reached.

What the BBC website article fails to mention is that although women would have lost out under the original EC proposal when buying car insurance they would have gained when buying a pension annuity. Currently a woman paying A for a pension annuity would receive X pension per year whereas a man of the same age would receive Y > X. This is because women on average live longer than men, so the same total pot has to be spread over more years. (If the insurance companies are doing their sums correctly women should receive the same amount as men when the appropriate total discounted payout is calculated).

The "85%" figure makes it sound like men are really *much* worse drivers than women, but in the UK men generally drive much more than women, so you would have to calculate the "serious offences per mile" to know whether men are really worse drivers than women on average. Of course insurance companies only care about claims, not claims per mile, so the financial bias against men makes sense. (Well any correlation between claims and "serious offences" is not obvious, but presumably on average the annual claims of a man is higher than for a woman, otherwise the insurance companies are being unfair.)

The Money Box programme on BBC Radio 4 interviewed Jacqui Smith (deputy minister for women and equality) (scroll down just over half way) and she claimed that the reason the EC backed down is because the benefit to women from the change due to pensions would have been not as big as anticipated. Let's hope that was not the reason they backed down (can things happen only if they benefit women?) but rather because the original idea was just stupid.

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