Confused.com reveals young female drivers to be hit with car insurance increases
Confused.com is urging young female drivers to shop around for new motor insurance cover ahead of the EU Gender Directive ruling on 1 March 2011. The ruling, which will decide whether or not it is legal for insurers to charge different premiums based on gender, will lead to massive change for motor insurance providers if pushed through, and is likely to result in further price rises for young female drivers as they absorb the difference between their current rates and those of their male counterparts.
Chief executive of Confused.com, Kevin Chidwick, said: “If the current ruling is overturned, insurance providers will no longer be able to use gender as a rating factor in setting premium prices. It is a fact that motor insurance claims made by young male drivers are significantly more expensive because they are more likely to result in death and serious injury, thus young men are currently subject to higher premiums. This will no longer stand up if the ruling is overturned. The result is likely to be a price rise for female drivers as they subsidise their male counterparts, who are responsible for more accidents, although it’s unlikely that male premiums will fall, at least in the short term.”
Because insurers will no longer be able to take gender into account, their overall approach to setting premium prices is likely to become more cautious as the effect of the change beds in. Based on its own car insurance index, Confused.com recently reported a 38.2% rise in the average premium over the last 12 months and it’s likely that drivers of all ages will be hit with further rises if the change is agreed.
In particular, young female drivers are likely to suffer. Women drivers aged 17-20 saw a 37.5% increase in premium price during 2010, making the average policy for this group £1,694. Despite being £999 more than the average female premium across all age groups, it’s over £1,200 less than males the same age - men aged 17-20 pay on average £2,976 for an annual fully comprehensive premium. As age increases the differential between male and female prices decreases, meaning it will be younger drivers who can least afford it that suffer the most.
As Confused.com recently explained to the transport select committee enquiry, further rises in motor insurance for young drivers would have implications other than just those on their immediate finances.
“It’s possible that more young people will decide to drive without insurance if their premiums continue to rise,” continued Kevin. "Un-insurance is typically most prevalent in young drivers, with drivers under 26 being 11 times more likely to have a conviction for driving without insurance from the last five years compared to the over 60 age group.
“Although the ruling could go either way, if the current rules are overturned prices could change overnight, so anyone looking to take out or renew a premium should shop around and secure a deal without delay. It will be a real blow for the industry if consumers suffer further price rises to cover the costs of young men who statistically cause more accidents and make higher value claims”.
Confused.com is one of the UK’s biggest and most popular price comparison services. Launched in 2002, it generates over two million quotes per month. Initially providing quotes for car insurance, it has expanded its range of comparison products over the last couple of years to include motorbike insurance, travel insurance, breakdown cover and energy, as well as financial services products including credit cards, loans, mortgages and life insurance.
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