Is equality always fair?

No doubt you’ve seen the news that the European Court of Justice (ECJ) has ruled that insurance companies cannot charge different premiums to men and women because of their gender.

The ECJ said: “Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination.”

The decision means that women can no longer be charged lower car insurance premiums than men. The requirement for unisex insurance premiums and benefits will start on 21 December 2012, giving national governments and the European insurance industry time to adjust, although customers could see premiums alter in the interim.

Belgian consumer group Test-Achats argued that a current exemption for insurers contradicted the wider European principle of gender equality, which led the issue to the ECJ.

Young male drivers are statistically more likely to crash than any other group, and are more likely to have more serious accidents – and this ruling naturally begs the question: what next? After all, age discrimination is forbidden in other areas of life – but older (usually more experienced) drivers are far less likely to have an accident or make a claim.

As far as young drivers are concerned, there is a massive gender difference in risk on the road and the likelihood of making an insurance claim. It’s not yet clear what the effects of this ruling will be on road safety – but there could be a variety of consequences.

If premiums for young female drivers rise, but stay the same for young male drivers, it’s difficult to see any road safety benefit – and it seems to be extremely unfair that extra costs should be borne by groups of people who present a lower risk.

However, on a positive note, if insurance premiums for young male drivers fall, this might encourage those who currently drive uninsured (because they find the cost of insurance prohibitive) to take out insurance, which would be a good thing. On the flip side, some young female drivers might be discouraged from insuring their vehicles if the cost of their premiums rises significantly.

It has also been suggested that some young male drivers might purchase high performance cars because the insurance would be cheaper, but it all depends on how much their premiums fall by and how much a high performance car costs. High performance cars are expensive in themselves, and many young male drivers would still not be able to afford to drive them, even with lower insurance premiums.

The real story of this European Court of Justice ruling is how unfair it could be for young female drivers if their insurance premiums rise despite their crash risk being so low compared to young male drivers.

Kevin Clinton

Road Safety Manager

2 Comments to “Is equality always fair?”

  1. Excellent blog Kevin. Totally valid points, in this case equality is unfair. The wider issue needs to be looked at here by the ECJ. It’s not such a clear cut case of discrimination, as they would have us believe. One minute we’re being told that women can’t have cheaper car insurance because it’s unfair but with the next breath we’re being told a certain percentage of top executives in business should be women! Totally contradictory if you ask me!
    I can’t see male premiums falling only an increase in the costs for women, which given the statistics is absurd.

    • Hi Nicola,

      Thank you for your comment – it will be interesting to see what comes out of the ECJ ruling, and what methods the insurance companies will use in future to assess risk profiles.

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