The European Court of Justice (ECJ) has completely changed the car insurance industry today by banning risk assessment based on gender. In the past, women have been given cheaper insurance quotes than men because they are seen as less of a risk on the road and less likely to claim.
However, after this practice was brought to light and contested by the Belgian consumer group Test-Achats, the ECJ have banned the use of gender as risk assessment criteria for motor insurance quotes. After the ruling, the ECJ claimed that “Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination”.
This new ruling comes into place on the 21 December 2012 and will remove gender discrimination from car insurance risk assessment. However, until the 21 December 2012, insurance companies will still be able to discriminate between the sexes and give women a lower insurance rate.
Once this new ruling comes into place, both men and women can expect to receive the same level of quotes for their car insurance. According to experts in the industry, this new act is likely to see an average 10% drop in car insurance premiums for men, whilst women are likely to face a massive rise of 25% in insurance costs.
Women under 25 will be hit hardest by this new ruling with their premiums being based mainly on age and experience, with gender now being removed from the equation. Young men will still pay a high level of insurance in the future, as they are high risk, but they will no longer pay more than their female counterparts.
With insurance companies now being banned from using gender as a risk assessment factor, it makes one wonder; will insurance companies now look at other criteria to asses insurance premiums?
Pingback: If you can’t use gender as risk assessment what can you use? « MotorQuoteDirect – Car Insurance Blog