KPMG boss speaks out on ECJ ruling

The implications of the recent ECJ ruling on gender-based pricing are unclear, according to KPMG UK head of insurance Drew Fellowes.

Fellowes said: “While many headlines have focused on the fact that premiums for women are likely to increase, there is much more of a story to tell. This ruling will have a profound effect on business models – forcing insurers to look at alternative ways to price their products and the data they collect on their policy holders as well as how they differentiate their brand and market their business.

Fellowes said that the motor insurance industry will need to market their products more strategically.

He added: "Marketing strategies will also need to take aggregators into account. The advent of aggregators has opened up a bigger market to insurers with little advertising budget, where customers will buy online driven predominately by price. Insurers who rely on aggregators as their main source of new business may fall behind the ‘big spenders’ who can undertake strategic marketing to direct business to themselves, so affecting their female/male mix."

Fellowes urged insurers to invest in telematics and pricing analysis tools.

"While it is likely that the ECJ ruling will accelerate the mainstream use of these types of technologies, this will be an expensive investment for businesses to make," Fellowes said. "In addition, the availability of alternative information on customers, for example data gathered by those with loyalty cards such as supermarkets, could prove to be invaluable and used either directly in price differentiation or indirectly to develop targeted marketing campaigns."