Young women facing £600 cost of G-Day insurance hike

The impact of new rules barring insurers from taking gender into consideration when setting prices is becoming clearer – and it seems fears of huge premium hikes for women drivers were well-founded.

Young women face paying around a third more for their car insurance as a result of the ban that came into force yesterday, according to new research.

The change arose from a 2011 European Court of Justice ruling that insurers should not be exempt from European gender equality principles.

It means insurers can no longer differentiate between men and women when calculating premiums and will affect the cost of car, life and protection insurance, as well as annuities.

The ban has been dubbed G-Day by the insurance industry.

Many insurers adopted the new gender-neutral approach in the weeks leading up to G-Day and early evidence suggests women drivers will be the biggest victims of the change.

The average of the best car insurance premiums for women leapt from £748 on 1 November to £932 on Wednesday this week, according to Gocompare.com. The comparison site’s analysis of quotes revealed that the average best price for 17 and 18-year-old women went up 32 per cent over the same period, reaching £2,523. Males of the same age have seen premiums fall by 10 per cent on average, reducing them from £3,460 to £3,855.

As insurers have shifted to unisex pricing, it’s become increasingly clear that female drivers will be hit hardest by the ban, said Gocompare’s Scott Kelly.

“The average female driver will see the best price for their car insurance rise by 25 per cent at renewal, while male rates will be largely unchanged. Young female drivers will be hit even harder with premium increases of around £600.”

The scale of the increases suggests the British Insurance Brokers’ Association’s (Biba’s) prediction of rises of between 15 and up to 38 per cent in car insurance premiums for some young women were accurate.

Leighann Forsyth, Biba’s head of communications, said: “Biba is concerned about the impact on females under 25 and would suggest that they look at the other areas that make up their premium to see if savings can be made.”

One outcome of the increases is that fewer young female drivers will be able to afford insurance. Almost two-thirds of women aged 18 to 24 say they would struggle to cope with any increase in their car insurance premium, according to new research from Co-operative Insurance.

Low awareness of the changes means few people took action prior to G-Day to minimise the impact on their finances. Just one in ten young drivers has cancelled cover and taken out new insurance in a bid to avoid being hit by the gender directive, the Co-operative found.

Up to one in four women drivers could be forced off the road when faced with higher insurance costs, uSwitch has estimated, while some women will be forced into debt to pay for their car insurance.

Women also face higher life insurance costs in the wake of the rule change, with premiums forecast to go up by as much as a fifth.

Men will also lose out when it comes to converting their pension pot into a retirement income. Annuities for male retirees will fall by up to 13 per cent as a result of the gender directive, as their lower life expectancy meant they were previously offered more generous rates than women.