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Equality Assurance

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Should men pay higher insurance premiums than women?
Yes, and I've said why (below).
0%
 0%  [ 0 ]
No, and I've said why (below).
100%
 100%  [ 4 ]
It's not that simple, and I've said why (below).
0%
 0%  [ 0 ]
Total Votes : 4

Spud McLaren
792023.  Tue Mar 01, 2011 7:15 am Reply with quote

From an article on R4 this morning, there's a decision imminent in the European Courts of Justice that may put a stop to gender-based differential pricing on car and private medical insurance. Is this gender equality gorn maad, or not?

If women can be proved to make fewer or lower claims on their insurance than men, why shouldn't they get lower premiums?


Last edited by Spud McLaren on Tue Mar 01, 2011 11:18 am; edited 1 time in total

 
dr.bob
792035.  Tue Mar 01, 2011 7:31 am Reply with quote

Gender equality legislation is designed to prevent an entire section of society being tarred with the same brush. As a generalisation, some parts of society may behave differently to others, but individuals have the ability to moderate their behaviour.

Note that this is different to basing insurance quotes on, say, postcodes. If I live in a rough area of town, I am more likely to have my car nicked. There's not a great deal I can do to prevent that (apart from installing anti-theft devices, which will reduce my insurance premiums).

However, as a human being, I can choose whether I want to drive like a maniac, or drive carefully. What I have between my legs while I'm driving has very little bearing on how I drive.

I don't see a great deal of difference between discriminating on the basis of sex for car insurance and discriminating on the basis of sex for employment. After all, it's a statistical fact that women are much more likely to take time off work to have children, yet employers are not allowed to choose not to employ women on this basis, despite it having a negative effect on the business's profits.

I also don't see a great deal of difference between discriminating on the basis of sex for car insurance and discriminating on the basis of race. If the figures show that black people have more accidents, is it acceptable for insurance companies to charge higher premiums for black people?

Personally I think that insurance companies should treat people as individuals by dint of having an initially large premium followed by a massive no claims bonus. If you can prove that you're a careful driver, then you should have lower premiums no matter what your sex or age.

 
Neotenic
792039.  Tue Mar 01, 2011 7:37 am Reply with quote

As some can probably imagine, this ruling is generating a not insignificant amount of discussion in my immediate vicinity.

Personally, I have mixed views - which is probably quite appropriate, really.

On the one hand, the fact that women generally pay lower premiums for their car insurance has a firm statistical grounding - although my understanding is that women generally have more frequent, but lower value claims. That is, women are more likely to reverse into bollards, and men are more likely to disappear in a fireball at the bottom of an embankment.

But on the other hand, gender is just one underwriting criteria amongst a whole host of others - like claims history, type of car, geographic location, where the car is parked, mileage, modifications and so on and so on.

Whilst I'm not going to pretend that I fully understand the relationships between all these criteria, I struggle to believe that it is so heavily weighted as to potentially increase women's premiums by 25-30%, as the Beeb article suggests could happen.

But I'd also say that it is actually quite nice to see an equality case where men could be the ultimate beneficiaries. I'm sure it's especially good news for the mousy little fellows pootling around in a Nissan Micra, who are effectively subsidising the boy racers to an extent - smoothing that out across the entire population is probably a good idea for everyone.

The insurers have a couple of years to get their pencils out and figure out how the new models are going to work, so I would take any portents of doom with a pinch of salt - but I personally wouldn't be at all surprised if we see the model move to be much more affected by the actual car being insured and any post-sale modifications, and the driving history of the individual behind the wheel, rather than the contents of their pants. I suppose what we could also see here is higher initial premiums, and deeper no-claim discounts.

 
Spud McLaren
792045.  Tue Mar 01, 2011 7:47 am Reply with quote

Neotenic wrote:
...the Beeb article...
Thanks for the link, Neo. For some reason it wouldn't open on my PC earlier, so I avoided it and substituted another instead.

 
barbados
792056.  Tue Mar 01, 2011 7:57 am Reply with quote

Neotenic wrote:

But I'd also say that it is actually quite nice to see an equality case where men could be the ultimate beneficiaries. I'm sure it's especially good news for the mousy little fellows pootling around in a Nissan Micra, who are effectively subsidising the boy racers to an extent - smoothing that out across the entire population is probably a good idea for everyone.



Thing is though Neo, in all likelyhood it will be that women will lose out by having to pay higher premiums rather than men benefiting from lower premiums

 
djgordy
792061.  Tue Mar 01, 2011 8:08 am Reply with quote

I was going to make some remarks regarding employment but dr.bob beat me to it. However, just to emphasise the point, if it is OK to discriminate in favour of women with regard to things such as car insurance, why isn't it OK to discriminate against them with regard to other things in life? That's the trouble with equality; sometimes it works in your favour, sometimes it doesn't.

 
Spud McLaren
792065.  Tue Mar 01, 2011 8:14 am Reply with quote

dr.bob wrote:
Gender equality legislation is designed to prevent an entire section of society being tarred with the same brush. As a generalisation, some parts of society may behave differently to others, but individuals have the ability to moderate their behaviour.
They have, but not necessarily the inclination.
dr.bob wrote:
What I have between my legs while I'm driving has very little bearing on how I drive.
According to the statistics, it does.
dr.bob wrote:
...it's a statistical fact that women are much more likely to take time off work to have children, yet employers are not allowed to choose not to employ women on this basis, despite it having a negative effect on the business's profits.
Again, true.
dr.bob wrote:
If the figures show that black people have more accidents, is it acceptable for insurance companies to charge higher premiums for black people?
First of all, do the figures show this? The anti-discrimination legislation might not actually be needed in this particular regard.
dr.bob wrote:
Personally I think that insurance companies should treat people as individuals by dint of having an initially large premium followed by a massive no claims bonus. If you can prove that you're a careful driver, then you should have lower premiums no matter what your sex or age.
Definitely agreed on that. Neo would be better placed to say, but I assume that insurance companies had historically worked on this statistical basis because it would have been too difficult in the days of widely-dispersed paper records to do otherwise. In these days of electronic records, computers, and internet, a more bespoke approach ought to be possible.

Edit: however, this isn't just about car insurance - what about other insurances, pensions, and annuities?

 
Neotenic
792085.  Tue Mar 01, 2011 8:56 am Reply with quote

Quote:
Thing is though Neo, in all likelyhood it will be that women will lose out by having to pay higher premiums rather than men benefiting from lower premiums


What are you basing this likelihood upon?

As I see it, on one simplified level, drivers have been segregated into two groups and the potential risk across those groups has been spread across all the members of it.

Following the ruling, these two groups will ultimately become one, and the agreggated risk spread across the whole market. And according to the third linky on this site, the split between male and female drivers is rapidly approaching 50:50, so I think we will see some rebalancing - just not necessarily as dramatically as some may make out.

I think the problem with the statistical approach is that it hides a multitude of mitigating factors - in much the same fashion as it does when comparing male and female average salaries.

It is more likely that a young chap is going to buy a poncy car with lots of plastic stuck to the outside, some fancy gubbins under the bonnet, bucket seats and a roll cage. And of course, premiums for such cars should and probably will be higher. So, even after the ruling comes into effect, it won't surprise me if on average men's premiums are higher.

But if you have two individuals called Anne and Andy, who both drive identical cars, live in broadly the same area and both have spotless records, then it does seem right to me that premiums are about the same.

Quote:
Edit: however, this isn't just about car insurance - what about other insurances, pensions, and annuities?


Of these, I think that annuities will be the most problematic, as life expectancy plays a big part in converting the sum paid in to set up the annuity into a monthly/annual payment - and women have a pesky habit of not dying.

but that's a job for the actuaries to figure out - and they're waaaay smarter than I am.

 
barbados
792109.  Tue Mar 01, 2011 10:13 am Reply with quote

Neotenic wrote:
Quote:
Thing is though Neo, in all likelyhood it will be that women will lose out by having to pay higher premiums rather than men benefiting from lower premiums


What are you basing this likelihood upon?



The fact that insurance premiums tend have a habit of increasing rather than reducing. Bear in mind that the second year of a claim free policy will be higher than first even after the NCD is applied.

 
Neotenic
792117.  Tue Mar 01, 2011 10:29 am Reply with quote

Quote:
The fact that insurance premiums tend have a habit of increasing rather than reducing.


Not always.

There is a defined phenomenon known as the Insurance Cycle, and premiums for pretty much any and all types of insurance go through periods of increase and decrease.

Quote:
Bear in mind that the second year of a claim free policy will be higher than first even after the NCD is applied.


Yeah, this is often the case - but not uniformally so.

What can happen is that insurers look at their books and see that, for example, customers stay with them for an average of three years. So what they may then do is price the policies on a three year basis, but load a fat discount in for the initial year to try and bring in the punters.

Fundamentally, the key differentiator for products as commonplace, and in such a saturated market, as car insurance is price - so getting the name of the company to appear at the top of the cheap list on the aggregator sites is the primary concern for some companies - they then bank upon customer inertia/apathy at the point the renewal letter lands on their doormat, so that they can actually make some money off them.

 
samivel
792143.  Tue Mar 01, 2011 11:49 am Reply with quote

barbados wrote:
Neotenic wrote:
Quote:
Thing is though Neo, in all likelyhood it will be that women will lose out by having to pay higher premiums rather than men benefiting from lower premiums


What are you basing this likelihood upon?



The fact that insurance premiums tend have a habit of increasing rather than reducing. Bear in mind that the second year of a claim free policy will be higher than first even after the NCD is applied.


Hang on, in the tuition fees thread you were criticising suze for suggesting that universities will charge top whack 'because they can, and because that's what tends to happen', and now you're using the exact same argument to suggest insurance premuims will go up and not down.

Once you've eaten that cake you can't still have it.

 
barbados
792166.  Tue Mar 01, 2011 12:37 pm Reply with quote

No that isn't true, what I was ssaying to suze was that the ceiling for tuition fees was to be set at 6,000, and not 9,000. In order to charge the higher figure the universities will need to meet a set of criteria laid out by the authority that has been established to ensure there is a fair availability. And although one university has claimed it will charge the higher fee, it hasn't actually been told it will be able to because it hasn't explained how it will comply with the guidlines.
What we are talking about here is two differant people that the only differance is their gender looking for an insurance policy.
The risk that the insurers are covering in the male is still the same, so in order to provide equality, the charge will be the higher of the two available to meet the risk.

 
samivel
792180.  Tue Mar 01, 2011 1:13 pm Reply with quote

That's an interesting statement, but it doesn't address what I said in any way. You're claiming that insurance companies have a habit of increasing their premiums rather than reducing them, and you're basing that on their past behaviour. When it was claimed that universities will charge as much as they're allowed to, based on their past behaviour, you wanted us to wait and see.

So either you have to wait and see with regards insurers, or allow people to claim past behaviour as a guide to future behaviour for universities as well.

 
soup
792186.  Tue Mar 01, 2011 1:21 pm Reply with quote

Neotenic wrote:
But I'd also say that it is actually quite nice to see an equality case where men could be the ultimate beneficiaries.


Yeah 'cos mens premiums will come down to those of women it wont be a case of womens premiums increasing to the mens level. Oh look another squadron of pigs.

Let's use simplistic numbers, men pay 10 for insurance whilst women pay 5 . You'd think Insurance premiums would be averaged at 7.50.
I have no evidence for this beyond blind predjudice, but I would expect mens premiums to stay the same whilst the insurance companies will bleat about regulations stating that they must charge women the same as men so their premiums will go up to the 10 level.

I'd love to be proved wrong, but as no-one(?) can see into the future we shall have to wait and see.


Last edited by soup on Tue Mar 01, 2011 1:34 pm; edited 2 times in total

 
suze
792190.  Tue Mar 01, 2011 1:28 pm Reply with quote

barbados wrote:
So in order to provide equality, the charge will be the higher of the two available to meet the risk.


Well, it might be - but for you to argue that it will be is really rather similar to the argument which you reject on the other matter.

But what strikes me as more likely in this instance is that insurance premiums will settle at a figure in between the current male rate and female rate. If we assume that the numbers of male drivers and female drivers are equal - and Neo tells us that this is not so far off being the case - then the new price ought to be halfway between the two current prices.

Now OK, it won't be - it will be about 10% above that, as part of a "contrivance to raise prices" (Adam Smith, 1776). But it won't be the case that both sexes end up paying the current men's rates. All the same, if I were the CEO of Sheila's Wheels, I'd be thinking very hard right now about my exit strategy.

The mention of annuity rates is interesting. Yes, men get more annuity for their money than women do because they tend to die younger. What's more, annuity rates are historically awful right now because of our ridiculous hyperlow interest rates.

As Neo notes, there is actuarial justification for men getting better annuity rates than women - but the suggestion is that this justification can no longer be allowed. Which means that the annuity rates available to men won't be good as they have been - and why do I think that the government might get more excited about this than it will about motor insurance?

There's been no mention thus far of health insurance. Traditionally this has been more expensive for women than for men, but presumably this too must cease - even though men don't do the most medically dangerous thing that most women will ever do, namely giving birth. (Some parts of the USA don't allow the use of sex as a parameter in setting health insurance rates, but pretty much everywhere else does. Or did until today.)

 

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