Gender neutral pricing in EU results in 32% increase in premiums for young women

Women aged 17 to 20 are seeing a 32% increase in average comprehensive motor insurance premiums over the last six months in the United Kingdom, according to the latest Confused.com/Towers Watson Car Insurance Price Index.

Because of the transition to gender neutral pricing, women in this age group are now paying £2,256 for an annual policy — a more than £500 increase. At print time, one British pound was equal to $1.57. 

Over the same six month period, rates for the youngest male drivers have fallen on average 14% —£466 — to £2.848, according to Towers Watson.

Prior to the European gender rule, young men aged 17 to 20 were paying nearly double what women the same age were paying —£3,314 compared to £1,707 — at the end of September 2012.

“Price competition is still very strong and margins fragile across the market as a whole, and the Gender Directive has introduced a level of uncertainty in the young driver segment in particular that has caused most insurers to take a cautious approach,” Duncan Anderson, head of pricing and product Management at Towers Watson, said. “Companies will be watching their policy portfolios very closely to formulate their next moves.”

U.K. drivers with comprehensive car insurance have, on average, seen prices fall in the last 12 months. Since the end of March 2012, the average premium has fallen by 9.8% to £736. In the most recent quarter comprehensive premiums fell by 0.1%; the sixth quarter out of the last seven in which a price drop has occurred, but indicative of the slowing of price decreases that has taken place since the third quarter of last year, according to Towers Watson.

Prices rose by an average of 2.7% in the quarter — an average of 1% in the last 12 months — for the smaller percentage of drivers with third party, fire and theft cover. This traditionally includes a higher proportion of younger drivers. Again, prices for young women between 17 and 20 years of age deviated substantially from the overall trend with a 20.9% increase in the first quarter. This contributed to a 43.2% rise in average premiums over the last 12 months.

“It is a tough time to be a female driver needing to obtain or renew insurance, particularly if they are under 25,” Gemma Stanbury, head of motor at Confused.com, said. “Equally, for those men who now find themselves eligible for hugely discounted premiums, it may be worth shopping around for a new policy which could save them a considerable amount of money.  

This is particularly relevant to younger male drivers who are still facing sky-high insurance premiums. While these decreasing prices are obviously welcome, insurance costs for this age group still remain close to £3,000 on average. ”