Industry adapts to gender rule
The AA British Insurance Premium Index released at the end of January has suggested that motor insurers are putting more weight on factors other than gender, including occupation, now that they are prohibited from using gender as one of the factors to determine the price of premiums. An individual’s occupation provides an insurer with insight into their likely driving habits and lifestyle, and hence the potential risks posed by a prospective policyholder. This makes it a valid and valuable factor for motor underwriters, Fitch Ratings says. Insurers have historically used occupation as part of the underwriting process. A 2011 pre-European Union gender ruling survey conducted by comparison website Confused.com listed pilots of harbour ships as being quoted lower premiums than state-enrolled nurses, with ship piloting traditionally having been a male-dominated industry, while nursing has been a female-dominated industry. The same survey listed mobile disco owners as paying the highest insurance premiums. These individuals are most likely to be driving late at night or early in the morning, the period that is statistically proven to have the highest proportion of fatal accidents.
The AA British Insurance Premium Index released at the end of January has suggested that motor insurers are putting more weight on factors other than gender, including occupation, now that they are prohibited from using gender as one of the factors to determine the price of premiums. An individual’s occupation provides an insurer with insight into their likely driving habits and lifestyle, and hence the potential risks posed by a prospective policyholder. This makes it a valid and valuable factor for motor underwriters, Fitch Ratings says. Insurers have historically used occupation as part of the underwriting process. A 2011 pre-European Union gender ruling survey conducted by comparison website Confused.com listed pilots of harbour ships as being quoted lower premiums than state-enrolled nurses, with ship piloting traditionally having been a male-dominated industry, while nursing has been a female-dominated industry. The same survey listed mobile disco owners as paying the highest insurance premiums. These individuals are most likely to be driving late at night or early in the morning, the period that is statistically proven to have the highest proportion of fatal accidents.
The recent AA survey showed the premiums for young (17 to 22-year-old) male drivers have been roughly static, while premiums for young women have increased by about 12 per cent – a result Fitch says it would have expected as a result of the gender ruling. In general, premiums for men of all age groups have fallen, while premiums for women under 30 have increased. The recent general fall in premiums for the market as a whole is more related to long-run pricing trends within the UK personal motor market than the gender ruling.
Over a longer period, the AA survey indicates that premiums for the 17 to 22-year-old age group have roughly doubled since January 2010, with substantial increases affecting all age categories over the same period. During this time, insurers have raised prices to restore underwriting profitability in response to a steep rise in claims costs from fraudulent and bodily injury claims, which the industry continues to seek to control more tightly.