Car insurance: ‘Women must prepare for the end of gender discrimination’

ANYONE who drives a car will have seen their premiums rocket over the past two years. A key reason for this is a rise in the number and value of personal injury claims, despite the number of car crashes on Britain’s roads falling.

The launch this month of a dedicated police insurance fraud unit, last year’s introduction of Continuous Insurance Enforcement and plans to give insurance companies access to DVLA data should see inroads being made into reducing the insurance fraud that contributes to higher premiums for all of us.

The last six months of 2011 saw the hefty premium increases tail off as insurers started to close the gulf between premium income and the cost of claims. But insurers are still making large underwriting losses and have depleted reserves. I believe that towards the middle of the year, we will see premiums start rising again although more modestly than in the past. If they don’t then we are simply storing up another severe price hike for the future.

However, the biggest change will be the end of the gender discrimination exemption enjoyed by Europe’s insurance industry, after the European Court of Justice last year ruled that from December 2012 insurers can no longer use gender as a rating tool.

The change will bring a major pricing shake-up that will particularly affect young women who, typically, pay premiums up to 40 per cent less than their male peers. I believe they will see premiums gradually rising towards December, and after that increases of up to 25 per cent.

But there is hope in the shape of new telematic or “black box” insurance, with several insurers launching such products. These systems measure driving performance including speed, cornering, and braking and pass this data real-time to the insurance company. Regardless of gender, those who drive carefully and within speed limits will see their premiums fall more quickly than with no-claims bonuses alone. Aggressive driving, typified by sharp cornering, heavy braking and disregard for speed limits will see them rise. In a nutshell, it puts responsibility for driving safely and responsibly firmly in the hands of the driver. Systems of this type could become more widespread, not just among young drivers. Some car manufacturers are starting to build telematic boxes into their cars and more will follow suit.

But that’s for the longer-term future: for now, we’ll see a lot of changes to car insurance that will, on the whole, bring benefits for most.

• Ian Crowder is public relations manager at AA Financial Services