Insurance companies will not be able to vary premiums according to policyholder’s sex from Friday
Women who take out car or life insurance could find themselves paying as much as £500 more when an EU ruling on gender comes into force on Friday.
From 21 December – known in the industry as G-Day – insurance companies will no longer be able to vary premiums according to the policyholder’s sex, following a European court of justice ruling made in 2011.
The change will hit women particularly hard; historically, they have paid considerably less for motor and life insurance than men.
The insurance industry predicts that car insurance prices for young women will rise by an average of 25% and that life insurance premiums for women could rise by as much as 20%.
Women could, however, be better off in retirement. The rates paid out from annuities, the insurance products that provide an income in retirement, are expected to rise by 6% for women.
The car insurance rises will be particularly daunting for young women. A 25% increase would add £531 to a policy for a woman aged 17-22 who, according to the AA, currently pays a typical premium of £2,057 (compared with more than £3,000 for men in this age bracket).
Some insurers still have not announced how much they plan to charge consumers when the rules come into force.
“The car insurance market is in chaos at the moment,” said Ian Hughes, chief executive of the market research firm Consumer Intelligence. “Of those who have changed prices, some have put premiums up; others have cut them – but our overall analysis of gender-neutral insurers shows that women are so far looking at a typical 12% increase.”
However, some changes that have already come in are much higher. One car insurer has increased the premiums for 25-year-old women by 26% to an average of £2,909, while another has increased the price a 44-year-old woman will pay by 43% to £1,402, according to Consumer Intelligence.
“We still don’t know exactly how the market is going to look post 21 December, but the assumption is that rates for female drivers will continue to rise,” said Scott Kelly, head of motor insurance at the price comparison website Gocompare.com.
Insurance companies are also cutting the length of time for which a quote is valid. Once an insurer gave a quote it was valid for, typically, 90 days, which meant that someone whose car insurance was not up for renewal until March could still get a cheaper price now. Quotes are now only valid for 30 days, according to Consumer Intelligence.
“Some insurers are cutting quote validity periods to just 14 days, or only holding the quote until 21 December, the gender equality deadline,” said Hughes. “If women are looking to renew soon, now is the time to act.”
Life insurance companies are playing their cards even closer to their chests, with only three having so far announced price changes. Legal & General has increased the average prices women pay for life insurance by 23%. By contrast, men will now pay 3% less. The Prudential has put rates up for its whole-of-life policies by an average of 17%.
Women who are considering taking out life insurance will almost certainly get a cheaper price now than after 21 December. While there are a number of factors (such as occupation) that insurance companies can tweak to keep prices neutral for women if they want to, the same cannot be said for life insurance.
“Premiums will almost certainly rise across the board for women from Friday,” said Kevin Pratt, insurance specialist at moneysupermarket.com. “If you are a woman with a clean bill of health and no obvious risk, you should buy now, as you can get a policy in place within a matter of days.