Young female drivers to be hit with premium increases
Confused.com is warning young female drivers that their motor insurance premiums may be about to rocket, and is urging them to shop around for new motor insurance cover. The EU Gender Directive ruling, which is expected on 1 March 2011, will decide whether or not it is legal for insurers to charge different premiums based on gender. Under the current rules young female drivers pay less for their insurance than young men, based on the fact they are less likely to make expensive claims. If pushed through the ruling 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.
Marketing director of Confused.com, Mike Hoban, 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. Motor insurance claims made by young male drivers cost more as they are more likely to be involved in serious accidents causing death and bodily injury. If the rules are changed, 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, meaning it's likely that drivers of all ages will be hit with further rises. The average motorist saw a 38.2% rise in the average premium during 2010.
"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 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 Mike. "Not having 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. In addition the fine for being caught, set at a maximum of £1,000 was just £185 on average in 2008, making it potentially attractive to those with high premiums and little finance. Increased under-insurance and fronting are also of concern as young people try and reduce the cost of their premiums.
"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 female consumers if they suffer further price rises to cover the costs of young men who statistically cause more accidents and make higher value claims".