Women still to pay less for insurance

Published on Monday 14 June 2004 12:01

Key points

• Directive to address sex discrimination

• 17 of 25 member states voted against

• Insurers welcome news

Key quote

"We strongly support the idea of a gender discrimination directive, and we support that it should be applied to financial services in some areas. But we do support a position where you can differentiate between genders if there is up-to-date factual evidence" - Jacqui Smith, UK Deputy Minister for Equality and Women's Issues

Story in full INSURANCE companies can continue to charge women less for car insurance and pay them less under annuities.

The European Commission looks set to back down from plans to ban gender discrimination in insurance premiums and annuity rates after most member states voted against the proposal.

The measures were included in the gender discrimination directive, which is currently passing through the European Parliament. It has emerged that senior representatives for 17 of the 25 member states voted against them at a private meeting earlier this month.

Women are statistically better drivers. The Association of British Insurers, the industry’s largest trade body, said the average cost of a claim for a male driver between 20 and 25 is 2360. For a woman, it is 1750. The difference lessens as drivers mature.

On the other side of the balance, women tend to live longer than men and so often find they are offered lower annuity rates than men. A 65-year-old woman will receive about seven per cent less income than a male; the gender difference for those buying annuities at 70 is nearer ten per cent.

Life insurance, critical illness and income protection cover are also priced according to gender.

Typically, life insurance costs a woman 25 per cent to 35 per cent less than a man. A 45-year-old non-smoking woman would pay 29.65 a month for 150,000 of insurance over 25 years. A man would pay 39.17.

Women pay slightly higher rates for critical illness and income protection than men because they are more likely to claim.

British insurers had expressed their concerns at the European Commission proposals, saying they would force premiums up because of the extra costs to the industry. Rather than benefiting from higher annuity rates, women would find themselves paying more for the cover in the first place, as the industry tried to cover its higher costs, insurers have warned.

Jacqui Smith, Deputy Minister for Equality and Women’s Issues, attended the meeting on behalf of the UK. The vote means that the Commission will not be able to pass the insurance proposals without a protest from the majority of its members, she said.

"We strongly support the idea of a gender discrimination directive, and we support that it should be applied to financial services in some areas. But we do support a position where you can differentiate between genders if there is up-to-date factual evidence," Ms Smith said.

A spokeswoman for the ABI welcomed the news. "The effects on consumers of this directive could have been very damaging," she said. "Risk-pricing helps insurers provide the fairest service at the keenest prices. Clearly, the vast majority of member states have been listening to the voice of the industry and we’re hopeful that the commission will take a sensible decision on the directive."

The gender discrimination directive aims to address and extend issues of sex discrimination and protection of gender equality beyond the workplace.