The European Court of Justice (ECJ) recently ruled that from 21st December 2012 it will be illegal for car insurance companies to discriminate on the grounds of gender. This means that insurers will no longer be able to charge male motorists more for insurance cover just because they are statistically more likely to have an accident and make a claim. This change to the regulations will in theory only have an effect in Europe, but the reality might be somewhat different. So what impact will the changes have on insurance prices and will it have any cross over impact on American motorists?
The effects of the regulation changes According to research conducted by UK based price comparison website moneysupermarket.com, the price different between male and female insurance premiums has escalated in recent years. The company published statistics which revealed that the average 18 year old male driver with a Ford Fiesta will likely be spending $5,050 more for insurance every single year than an average 18 year old female driver with the same vehicle. This equates to a 79% price difference between the two.
This price difference reflects the fact that male motorists are statistically more likely to be involved in an accident and make a claim. A Belgian consumer group called Test-Achats complained that this was discriminatory and campaigned for action. This ultimately resulted in the ECJ ruling which means that the practice will soon become illegal.
However, insurers can not afford to simply bring male prices down to female levels. It is therefore anticipated that female prices will rise by about 25% in Europe from the 21st December 2012 onwards, with male prices only dropping by 10% according to the BBC. Ultimately this is bad news for the average family, who will ultimately be paying more for insurance every single year.
The new regulations have ultimately been condemned by many industry experts like Simon Douglas from the AA, who claimed that it was �bad news for motorists generally.�
Possible cross over impact on America The majority of major auto insurance companies operating in America do have operations in Europe. This means that they will be affected by the ECJ ruling to some degree.
Although the insurers won�t legally have to enforce these regulations in America initially, the American insurance regulators will be expected to follow the route used in Europe eventually on moral grounds. This will be the preferred route of auto insurance companies, who will stand to make a greater profit from American motorists as a result of this.
Will it impact on America?
Car owners in America way have slightly longer to prepare for these changes, but the generally consensus from insurance industry experts is that they will be affected by the ECJ ruling eventually.
When this happens American motorists will likely be impacted in a similar way to European drivers, with female prices rising by 25% and male prices dropping by just 10%. There appears to be little that can be done to prevent it in this increasingly globalised world.
