D-Day for gender pricing

The UK motor insurance industry woke up today to a new reality – not the beginning of the predicted Mayan apocalypse, but the first day of the EU Gender Directive.

Like the Mayan apocalypse, the gender directive D-Day seems somewhat uneventful after so much hype.

There is still a lot of uncertainty about the future of motor insurance pricing. Insurers can expect much jostling for position as carefully guarded pricing strategies are unveiled and pitted against each other, perhaps with a related shake-up in market share.

The ripple effect

The pricing uncertainty has an obvious knock-on effect to brokers, but intermediaries have a quite separate problem as well, as they risk falling foul of the new legislation if their panel’s pricing is not gender neutral.

This is a tricky one. Single insurers might be able to prove that their pricing is gender neutral, but a customer approaching a broker for motor insurance might find that different insurers offer different prices for male and female drivers with the same risk profile. Benchmarking firm Consumer Intelligence believes that in these circumstances brokers have done nothing wrong, but are still legally responsible for the situation.

The effect of the directive on consumers is also uncertain. Beyond the consensus that male motor premiums will drop on average while female’s premiums will rise, there is also speculation about whether the directive will force up to one-quarter of female drivers off the road, as a Uswitch survey predicted.

To add another angle to the issue, the AA Insurance thinks that changes in the insurance market are masking the most extreme effects of the directive.

The only thing that everyone agrees on is that motor insurance pricing has an uncertain future.