Should Insurance Be Sexless

A question about : Should Insurance Be Sexless

Poll started 28 Feb 2011:

This discussion is for

Martin's Should insurance be sexless? blog

Is insurance gender descrimination fair? vote

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Best answers:

• I worked for a car insurance company at uni and I was under the impression that it was the 'risk' aspect that was the problem rather than the gender.
  So, for instance (using made up stats!):
  Postcode A - 60% car claims are theft
  Postcode B- 30% car claims are theft
  The insurance premium would consider postcode A as higher risk. Now, I'm entirely for equal rights- it's a key issue for my life but as far as I was aware the premium weren't based on discrimination but on evidence:
  Gender A/ under 25= 80% of claims for crashes (at fault)
  Gender B/ under 25 = 65% of claims for crashes (at fault)
  So, whilst I can understand, theoretically, why it's bad to place a higher premium based on gender, I don't get why it's not based on *risk* factors, as all insurance should be?
  Surely car insurance is based on: Type of car + postcode + age + previous claims + gender + and so on?
  In which case, why isn't age being defined as discriminatory? Why is it ok to say that under 25s have more crashes than over 25s but it's not ok to say men have more crashes with women?
  I am genuinely confused by this!
• I currently work for a UK insurer and quite simply if this becomes law all insurers will increase rates to the higher risk levels. However, going forward occupation will have a bigger impact on rating information - eg majority of primary school teachers are female and this means statistically they will be better drivers. Sorry guys women are safer drivers on the whole. Whilst this means increased premiums the insurance industry doesn't really want it as the admin is a huge headache and cost.
• Even if the young male driver after 3 years of claims has had no claims, no accidents etc, he may get a reduction however it would still be higher than a young female drivers insurance.
  Now is that fair? Are they taking into account his sex rather than his safe driving?
  I do agree with the age issue too, however they cannot tell how 'safe' the driver with 3 years experience compared to 20 years experience, therefore it is not age but experience that is being judged.
  type of car is due to how expensive the car is which explains itself
  Previous claims are from how likely they are to claim again.
  Where you live is if your car is more likely to be vandalized or stolen.
• It is a complete nonsense to use unisex rates. The comments above about using profession illustrate that with general insurance. The same nonsense occurs with unisex annuity rates.
  The nonsense of it all is seen if you think of a male and a female who have both saved a retirement pot of say 50K in an ISA, and then consider a male and a female who have both saved 50K in a pension pot and decide to buy an annuity.
  Under the current position all can expect to get about 50K in value out of their pots of money (of course what they will get will depend on how long they live, but they can EXPECT to get benefits to the value of 50K when they retire).
  Under the unisex annuity rules the male and female who save via the ISA will still get 50K in value. However the male buying an annuity can expect to get benefits worth less than 50K and the female benefits worth more than 50K.
  So the proposed unisex annuity rates seem to me to create discrimination not eliminate it.
  By pretending that male and female life expectancy is the same, you create a framework for nonsense. It is like keeping the current arithmetic system but suddenly decreeing that from now on 2 + 2 = 3. You are then left with the question what is 2 + 1? Well it must both be 3 and one less than 2 + 2 so it will equal both 3 and 2 at the same time.
  When pricing policies perhaps insurers will insure according to risk and rating factors that are more prevalent in males or females. For example they could look to identify professions where predominently males work and then offer better annuity rates (e.g. to ex miners).
  When offering impaired annuity rates insurers will offer enhanced annuity rates to those who have suffered a heart attack not just because a heart attack reduces their life expectancy but because a heart attack itself indicates that they are likely to be male. How on earth do you decide which bit you strip out and can allow for without discriminating, heart attacks are one of the reasons that males live less long than females after all, but then if you don't allow for it how do you offer the male who has had a heart attack a better rate than the male who hasn't? It is analogous to deciding what 2 + 1 is in the above arithmetic system.
  Annuity companies will also target advertising at males as they make more profit from males than females purchasing annuities so we can expect to see some interesting advertisements, and some interesting company names e.g. Sexist Sid Annuity Company
• I haven't researched this fully and realise my following comments may be voided by a lack of understanding, but here goes...
  If gender a is statistically higher risk that gender b, then I think that is more than reasonable to quote a higher price for the higher risk group. Same applies for age. As another user has commented though, if someone who falls into a high risk group has proven they are a safe driver by having had no claims for, say, 3 years, then it's reasonable to expect their premium to drop accordingly. If it's based on a statistical risk factor (as are postcode area's known for high theft or vandalism rates) then this isn't what I would call discrimination.
  IF they do decide to increase premiums for female drivers, then it strikes me that it would be only fair to meet in the middle (i.e. raise premiums for women drivers by 50% of the difference and drop premiums for male drivers by 50% of the difference). If they are only planning to raise the premium for women and leave them the same for men, then surely all this is going to result in is more money to further line the pockets of insurance companies?
• I think everyone should be equal until they prove they're safe or not. Maybe affix a risk based on driving test results and put more emphasis on pass-plus etc. would be a good idea. Then after a few years you change it to be based on history.
  I was 17 when I passed my test, went very quickly from a 1.3 Metro to a 1.4, then a 1.8VVC hot hatch - I was charged extortionate insurance premiums yet I never crashed or claimed once!! Surely once I hit 20 and had 3 year NCB my insurance should be allowed to plummet as I'm obviously a low risk - so why did I still have to pay twice what a 17 year old girl paid - they have NO idea how careful she is. We're all different and should be judged as such not based on the average over the entire country, otherwise those above average get raped and those below average get rewarded.
• There is a guy on the facebook forum ranting and raving about why it ISN'T fair that women drivers get lower rates - I'm mentioning him as the argument for why they should.
  Martin says in his blog that maybe certain differences are ok because they are based in biology (women living longer) but others not. My argument is that it is based in biology just the same - testosterone is part of biology and it could be argued that the testosterone is to blame for the higher rate of accidents and greater damage caused when the accidents happen.
  The guy on face book is arguing that if he crashes his car whilst overtaking it is the other person's fault for going too slow!!
  Maybe a fairer way would be to base premiums on personality and anger management profiles - except I'm sure that would be open to abuse whilst ever the test were down to self reporting even if done via questionnaire.
• The sex of the driver is a very important factor in determining the risks. If you need any proof look at road death stats. (We all know Insurance companies live on Stats).
  However Perhaps the insurance companies need to have a Now claims policy that balance's this faster and a Clean licence discount. This could conceivably bring male premiumens in line with female drivers after the driver has a few years experience.
  With current Tech dashboard cameras are coming soon as are young drivers curfews and passenger limits
  Maybe to qualify for discounts drives should log hours behind the wheel.
  I can't help but think that by the time someone has full NCB and has driven almost every day in the last 16 1/2 years it should of balanced out.
• Surely causing half the population of Europe to pay more for car insurance as a result of their gender is exactly the sex discrimination this ruling is trying to prevent? If a ruling has to perpetrate the crime it is protecting us from, there is surely some fundamental flaw in the logic powering it?
• There is an issue of incentives here. Suppose an insurance company can make money charging Ј50 to group A but need to charge Ј100 to group B to offset their higher risk. If they are now required by law to charge the same amount to both groups, then you might think that they would charge Ј75. But this means group A would be less willing to pay, while group B would be quids in. So you'll get disproportionately more of the higher risk group (group B) who you're selling insurance at a loss to, and you'll go bankrupt.
  This is the problem of information asymmetry. It means that, moral issues of equality aside, it's harder for an insurance company to stay in business if they are not allowed to discriminate based on risk factors.
  Speaking as a male driver, I don't like it, but it's better than the alternative.
• As a general rule, women are more nervous/dippy and men are more aggressive/cocky. It should be based on one strike and you're out as you can't base it on 'gender associations' Boy A and Girl A both get X amount first year, if you muck up by being a poor driver then you fall into the higher risk format. It would be interesting to see a statistic of how many men are insured on the road to women and there distances travelled each year.
• The whole topic's a moot point.
  If the decision goes through as expected, girls' premiums will rocket and boys' will drop by a pound or two.
  It will be the insurance companies who win.
• I passed my Full UK Driving Test at age 17 - the minimum standard required to legally drive a motor vehicle.
  From 17 to 21 i drove accident free, but I cannot honestly say near-miss free.
  When I was 21, I signed up for IAM Advanced Driving lessons and Test.
  I chose to, and was lucky enough to spend 6 months with a RoSPRA Gold standard, IAM Observer, learning advanced driving techniques based on Roadcraft - the police driver's handbook.
  The test can be passed (scraped) with weeks of intensive training, but I wanted to learn advanced driving techniques - not how to pass another test.
  The test was 1 hour long with a serving/retired police driving examiner scrutinising every part of my driving ability, observation, etc. I performed a continuous running commentary for the entire hour - it's used to demonstrate your observation, awareness, concentration and tasking etc - but is no longer a requirement for the test - it's v.v. hard to learn to do well, and v. hard to maintain.
  I passed, and the examiner commented on it being very good (top quartile) of tests undertaken, but not the best - tssh - police examiners are very hard to impress!
  From 21 and for the next 5 years, I practiced (maintained) my advanced driving skills, including full awareness commentary!
  I'd never been involved in, or around a near-miss or collision, and used the skills IAM taught to anticipate many hazards (and mistakes) that would otherwise have led to many near-misses, and possibly the odd collision, for myself or those around me. By observing other people's driving behaviour, and applying the skills IAM teaches - you can anticipate their mistakes, and where practicable and safe to do so, even prevent them making them.
  My Girlfriend passed her test at 17, lost control of her car within 12 months, rolling it down an embankment, with her and her 3 occupants narrowly escaping (thank God), with recoverable injuries.
  Every year, I ran Car Insurance quotes:
  Me with clean full licence + IAM Advanced, and,
  Her, with 3 points and written off car to show for the Collision
  - Changing gender to female reduced lowest premium by Ј200 - Ј500
  (more when I was - Changing 3points+'accident' to clean+'IAM Advanced' reduced lowest premium by only about Ј50.
  - Adding 3point+'accident' female onto my insurance *always* reduced my lowest premium by over Ј100!
  - I didn't know whether to laugh or curse - she always found it amusing, and had the bonus of being able to borrow my car to drive.
  It does not take a statistician to work out the loading is based on profit-driven discrimination, not statistical risk.
  I know from experience how much difference Advanced driver training makes to accident risk - the UK driving license is a minimum standard - not an acceptable one.
  IAM https://www.iam.org.uk/
  RosPA https://www.rospa.com/drivertraining/default.aspx
  P.S. It's over 10 years now since I passed my IAM advanced, and i cannot honestly say i still drive near-miss free. I've never been involved in a collision, but IAM teaches you that a near-miss *is* a collision - it's a situation that you can be trained to anticipate and avoid.
  - when i was 21 and having just passed IAM, my friends would comment it was like pre-cognition - you see the hazard before it develops.
  - 10 years on, the difficulty of maintaining that standard without continuous training and assessment means I can see too many weaknesses in my driving have developed - far better than what i was taught to pass the minimum standard UK driving licence - but far below the level I was, and would want myself, and everyone else on the road to be at.
  - I should be contacting the IAM methinks, to see if I can find another IAM Observer, as good as the one who really taught me to 'drive'.
  - I would love the UK to move to a tiered system based on 'levels' of driving, rather than just a minimum standard, so that people (even us young male 'reckless' drivers) could take pride to demonstrate and maintain a better driving standard.