Men and women to pay the same for insurance
Published ¤ 01/03/2011 11:25:39
The European Court of Justice (ECJ) has ruled that insurers can no longer charge preiums based on gender.
This will mean that men and women will be charged the same for things such as car insurance and pension annuities.
At present women enjoy much lower premiums for car insurance then men, because, on average, women make less claims than men. However, in future, the cost will be the same. This will probably mean that women will have to pay substantially more, and men less, for car insurance.
Simon Douglas of AA Insurance said that the decision could add about £400 to the annual cost of car insurance for a young woman.
The ruling will also affect annuities. Annuity rates are based on longevity, and women have a longer life expectancy than men. As such, women currently receive a lower income from their annuity then men, but this will change when the ruling comes into effect in December 2012. It is likely that men will see their annuity rates drop, while women should see their pension income increase.
Tom McPhail, a pension specialist at the investment firm Hargreaves Lansdown, predicted that annuity rates would equalise for men and women, at levels higher than female rates but "significantly worse" than current annuity rates for men.
Paul Skinner from PKS, an insurance broker in Odiham, North Hampshire, said "This is bad news for everyone. The cost of car insurance has risen dramatically over the last couple of years, and this judgement will only compound matters. How it will affect other areas of the insurance industry is yet to be seen, but the insurance companies are likely to be the biggest winners.
"The cost of life cover has fallen steadily over the last few years, as people are now living for longer, and typically women pay less than men. We could see the cost of cover for women increase by as much as 20%, while the cost for men will only decrease slightly. This is because more men take out life cover than women.
"We would recommend that women buy their life insurance as soon as possible, before insurance companies begin to factor in the changes before December 2012."
To compare the cost of life insurance, visit our comparison page by clicking here, or call PKS on the number at the top of the page to discuss your requirements in more detail.
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