ECJ insurance ruling raises concern over age discrimination
In addition to raising insurance premiums for women, there are fears that today’s European Court of Justice ruling that gender based pricing in insurance is illegal, will lead to further challenges with regard to age discrimination.
Mark Winlow, head of general insurance at KPMG, said: “The most immediate effect of this ruling will be felt by women who will see their motor insurance premiums increase by up to 50%. However, of greater concern to the industry is the likelihood there will be further European challenges, particularly around age. This is a more significant factor than gender as age is used much more widely to differentiate risks. For example, a young male driver can easily be charged 1000% – 2000% more than the same man when he reaches 50. In anticipation of further restrictions, insurers are already looking to alternative methods to understand their customers and risk better.
“A number of insurers are already investigating alternatives to assess the lower risks, currently determined by gender. Those who already capture diverse information as part of a quotation or have alternative customer data from loyalty cards or memberships are likely to quickly maximise the benefit, leaving others exposed to the higher risks or charging higher prices."
KPMG also predicts that this ruling will encourage many insurers to fast track their use of telematics, driver tracking technology.
Mr Winlow continued: “Those in the industry not researching improvements to their rating, underwriting or product developments for the future are likely to be soon exposed by the ever competitive UK market. Telematics is an area being investigated by a number of motor players. This uses information provided by a “black box” located in the car, feeding back details on driving styles, times, driver etc, negating the need for much of the customer based information currently captured. Telematics is already used extensively in other European markets. Despite the current cost of installing the black boxes, developments of this nature could have far reaching affects on the market, removing the traditional annual renewal in favour of monthly statements determined by that month’s driving habits.”