Car premiums could double, if age discrimination for insurance ends

AA Insurance has expressed concern about the potential impact on buyers of car insurance, if the Equalities Bill, due during the 2009/2010 session of parliament, extends to the sale of insurance. Age is one of several factors, which also includes sex, that affect risk and enables the insurance industry to tailor products precisely and fairly to the individuals concerned and was the topic of a report published today (Monday 2 March 2009) by the Association of British Insurers.

Simon Douglas, director of AA Insurance, says: "An unintended consequence of applying age equality to car insurance will be a be reduction in premiums for a few at each end of the age range but an increase for the majority.

"There is a significantly greater likelihood of a claim being made especially by young and inexperienced people. Similarly, as age advances, the likelihood of being involved in a collision increases."

Simon Douglas points out that the lowest risk is presented by drivers between 45 and 65, for both sexes. "For example, young men aged under 21 are 10 times more likely to make a claim than someone aged 35 or over. Similarly, the size of claim for a young male driver over is £4,200, compared with £1,400 for a male aged 35 or over. That's why premiums are high for young people.

"Removing age discrimination could well double premiums for the majority of middle-aged drivers, of both sexes."