Private car insurers face EU gender directive challenge

The private car market faces one of its greatest challenges when the EU gender directive comes into force at the end of this year, both in terms of underwriting risks and marketing products to a unisex audience.

That is according to financial research company Defaqto, who said that premiums will rise for many female drivers while male drivers will see their premiums drop.

It said that providers who have a large female book of business will need to address the risks involved in retaining this business as well as providing cover for the riskier male driver, making product differentiation in cover, marketing and sales processes key for motor providers in 2012.

Defaqto’s latest review of the motor insurance market, published today:

• Looks at the size and distribution of the private car comprehensive market by provider, product and underwriter
• Reviews key trends in policy fees, product cover, excesses and accident management services which can help providers identify potential areas of differentiation
• Assesses some of the key impacts of the gender directive and how providers are changing their focus towards behavioural underwriting

Defaqto’s insight analyst for general insurance Mike Powell said: “The market faces one of its biggest challenges when the gender directive comes into force at the end of this year, both in terms of the underwriting and pricing of risks and how it markets products to its target audience.

“The introduction of the gender directive will create a level playing field. Although premium will still be one of the main purchasing decisions, this is a clear opportunity for the market to move consumer focus away from price and onto the quality of the actual product they are purchasing – and to differentiate their products in a crowded marketplace.