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Mr May said female drivers have a statistically lower risk of crashing than their male counterparts
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Warning of rise in car insurance premiums

August 20, 2012

Insurance costs could rise next month by 15 per cent in response to a European ruling, the director of a financial firm has warned.

Greg May, director of Flower IMA Financial Services, said the new EU Gender Directive, which comes into force at the end of the year, will see insurance companies adjust premiums from September.

Mr May said: “Ignoring gender in many cases leads to more losers than winners. For example, young female drivers have a statistically lower risk of crashing than their male counterparts, and so insurance premiums have historically reflected this and charged them less.

“But from the end of this year, this fact will not be taken into account, despite the fact that car accident figures are not discriminatory – they are gender neutral and are purely documenting the truth.”

Flower IMA, part of the Romans Group with branches in Wokingham and Crowthorne, is also warning life assurance will be affected.

Mr May continued: “The effects of gender-related illnesses will no longer be counted, and nor will the fact that women live longer than men. That means critical illness and life assurance cover will become more expensive for women. Meanwhile, income protection for men will also cost more, because historically they had a lower claims record – and thus cheaper premiums – than women.

“We are strongly advising customers to review their insurance well before the end of the year – industry pundits predict that many existing premiums will start to rise by approximately 15 per cent during the autumn.”

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Most recent user comments 9 of 9

If they didn't sell on customers' details to ambulance chasers who then claim against other insurers for mysterious injuries, or pay out so repeatedly for whiplash (and injury that is hard to diagnose, but that can seemingly be almost self-diagnosed by people who have a monetary motivation for such a diagnosis to be made), then they might actually start to make money. As soon as someone has an accident that wasn't their fault, medical and compensation claims come in as they have wads of cash dangled at them from a stick to encourage that claim. Once the insurers have admitted liability, they seem to just pay out any claim put in front of them.

I know insurers are fighting fraud together, and I have worked for a company that sold an innovative product that spotted clusters of false claims with ease to bring fraudsters to justice, but just as soon as one scam ends, another begins. But I don't really believe there is significant motivation to fight against some claims and fraud in the industry because at the end of the day, they can just put premiums up because it is a compulsory product if you want to drive.

But I don't work in the industry. I can't claim I know about it. But what I can see is that insurance premiums have increased dramatically over the last five to ten years, and the number of accidents has not. What has increased is the amount claimed on average. So what has changed? Why is the average claim more expensive to pay out now than it was 10 years ago? If that stopped, insurers would make money (if they aren't already), and premiums would fall.

mavdo, Wokingham
23/08/2012 at 09:56

I work for an insurance company who has just stopped writing motor insurance exactly because we don't make money on it. The other insurers don't make money on motor insurance, but their other activities subsidise it so they make money overall (which is what we did but have decided not to).

As an example I know one large insurer who includes motor among a number of insurance and financial services products they provide, and for every pound they receive in premiums they pay out one pound thirty in claims. Now you'll ask why do people write motor insurance - Brand Advertising. They'll then hook you for everything else which does make money.

BinMan, Binfield
22/08/2012 at 19:34

@DT - Agreed, and if you do claim, your premiums will rise as a result, and you end up paying the money back anyhow.

I claimed in about 2001 for a £450 write-off after my car was torched partly because I wanted the wreck taken away quickly, but also I should have been able to claim against the adjacent car's owner because it was their car that was actually the subject of the arson - mine caught alight from their burning car. As it turned out, their insurer denied any liability and refused to pay, and my insurer refused to take them to court for the sake of £450+costs. But after this, I lost my no claims and my premium more than doubled. I ended up paying them back vastly more than £450 over the course of the next five years due to the rise in my premims. Had I decided claiming wasn't worth it, just the telephone call alone to talk about it would be considered "a claim" and my premiums would have risen anyway. How can that scheme possibly not make money??

mavdo, Wokingham
22/08/2012 at 14:59

100% - "Why should they rise simply because they have to be equalised? The average cost should be exactly the same. Perhaps the insurance companies are taking advantage of the regulations to raise their premiums but they wouldn't do that would they?"

And if an insurance company wasn't making money, it'd go out of business. Of course they make money - how much have you paid in insurance over your lifetime, and how much have you claimed back?

Damiano_Tommassi, Wokingham
22/08/2012 at 12:32

@Binman - really?!? I *seriously* doubt that. You pay through the nose for a compulsory premium to cover you when you need it the most, then if and when you do need it to fall back on, they try and find any possibly excuse they can to avoid paying out. Then they sell on your details to ambulance chasers to increase their profits, an action which ends up putting the premiums up to cover the costs of the claims those people make against them!

Insurance is often just a license to print money.

mavdo, Wokingham
21/08/2012 at 18:44

Woky Local - you'll be lucky to find any insurer who actually makes money on motor insurance.

BinMan, Binfield
21/08/2012 at 15:04

Insurance costs should fall next month as insurers are forced by EU regulations to lower the rates for males tob e compatible with those for females!

Why should they rise simply because they have to be equalised? The average cost should be exactly the same.

Perhaps the insurance companies are taking advantage of the regulations to raise their premiums but they wouldn't do that would they? While an individual female's costs may be blamed on the EU, individual males should have cause to celebrate. The problem lies with the insuramce companies who after all are a slight variant on bankers.

PoneRana, Wokingham
20/08/2012 at 12:26

Insurance costs could rise next month by 15 per cent in response to ...... insurance firms wanting to make money.

Woky Local
20/08/2012 at 11:53

Insurance premiums for men should not rise. If they do because of this, that would be illogical.

I'm male, and I've never had an accident in 14 years of driving. Yet under the old system, my premiums will always be higher than for a female, even if they've had a number of accidents in that time. Is that fair? No, that is discriminatory, and rightly illegal. If I ad a female onto my insurance, even if they never drive my car, have previous accidents over 3 years ago and far less experience, my premium falls. Why?

That the insurance companies have decided to simply bring females' premiums up to those of males is questionable under price fixing laws, but that's for a later case.

But females' premiums should rise. Insurance is a subsidy of those who claim from everyone else. That's how it works. Why should I subsidise my gender just because the accident rate is higher when mine is far below the average for either gender? If such a policy was made over the colour of your skin (say white people caused more accidents, so black people got cheaper insurance), or sexuality, or colour of hair etc, then people would question it. In this case the law has been tested, and a new law has been passed to enforce discrimination legislation.

According to EU law, age should not form a part of premium calculation either, but experience can. That one is perhaps more controversial, eg a 17 y/o is clearly more likely to have an accident than a 40 y/o passing for the first time, mainly because of peer pressure etc, but it could be tested in law in the future too.