News

April 2011 The whole market will suffer insurance ruling

The news that the European Court of Justice has ruled that motor insurers can no longer differentiate between men and women for their car insurance beggars belief. I sometimes wonder what planet those who pass our legislation live on, because it obviously isn't the one you or I are from.

What comes next? Will it soon be ageist to charge a 50 year-old with 30 years' faultless experience less than a 17 year-old who's just past his test? Will it be discriminatory for a sales rep to pay more for his 60,000 miles a year than a housewife doing 5,000 because he can't help what he does for a living?

The same logic could equally apply to GAP Insurance. Will it be illegal to charge variable rates for cover based on the value of the vehicle when it’s bought? The ramifications for our market are potentially enormous and motor insurance could well be just the tip of the iceberg.

Regardless of how you view general insurers, their business is based on the assessment of risk and that assessment is made from fact. This isn't sexism or an argument about whether women are better drivers than men, it's cold hard fact – women have fewer and lower cost motor insurance claims than men and they represent a lower risk as a result.

Insurance premiums are calculated based on extensive modeling and experience of risk; it’s not numbers plucked out of thin air, but the recent ruling seems to take the view that 350 years’ of insurance market experience counts for nothing and is unfair in the grand scheme of things.

Of course, don't think for a minute that half the country's drivers will suddenly be paying less for their insurance than they do now. The whole market will suffer as a result of this ruling from Luxembourg and it will be the customer who foots the bill.

Legislation is meant to be there to protect us as consumers, but just who's being looked after here?

By Tim Heavisides, Group CEO of Car Care Plan Holdings.

This article originally featured in Car Dealer Magazine.

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