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Are UK car insurance actuarial practices compatible with equality legislation?

Throughout the history of UK car insurance companies, the use of gender as a predetermining factor of car insurance quotes and rates has been the norm. It is rather harsh to categorize every driver on the basis of their sex and put the good or bad driver seal on them based on that. Women have been the greatest beneficiaries of these warped actuarial statistics while men have been the sufferers. The general assumption is that women are safer drivers than men and so deserving of lower rates.

What happens to the man who is a careful driver, even more careful than a woman of the same age? They end up paying more for than they ought to. Unfortunately for men, they have all been lumped together in the boy-racer group, yet only so many of them actually fit the tag. The most notorious group of young male drivers for accidents is the 17 to 25 age bracket. Insurers have always taken it upon themselves to dictate what every male driver should pay, to compensate for the potential risk of loss they (insurers) are likely to incur when they choose to cover a young male driver.

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That is not to say that young female drivers of the same age bracket are all safe drivers. When the insurer puts a blanket clean bill of health for all young women; the young, college student who goes clubbing all weekend and still gets behind the wheel pays less than a more careful young male driver, who drives only when sober. Yet she exposes a higher risk to other road users than does the young man.

To an extent, the insurers’ decision to give different rates for men and women is affected from the fact that male drivers are exposed to specific kinds of risks and women another type of risk. It is true that men love to drive fast, but there are also those who like a smooth, easy ride. Along the same vein, there are women who will outrace the fastest man on the road any day.

For auto insurance companies to embrace equality legislation, they must do away with using gender/sex as an actuarial measure. The recent ruling by the Court of Justice of the European Union (CJEU) preventing insurers from setting premiums on the basis of a policy holder’s gender has been long overdue. Insurers must be able to look at factors that address individual experience on the road, not generalizations. They should embrace a whole new set of taxonomic measures that will determine a person’s risk level on an individual level.

The current rates paid by motorists do not reflect the individual, insurance situation. Car insurance companies must start using techniques that give accurate, precise and individualistic risk assessment. That way, middle aged male drivers can save a big percentage off their car insurance. Young women drivers with no experience could see their car insurance expenses shoot by a few hundred pounds – as they are young are new to driving and thus carry a potentially high risk.