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We are all equal......

We thought the age of chivalry was dead. It seems that in Europe this may certainly be the case since the European Court of Justice (ECJ) has ruled that, when it comes to Financial Service matter, we are all equal!

According to a ruling announced by the European Court of Justice on Tuesday 1 March, Financial Services companies, such as insurers and providers, can no longer base their pricing on the sex of the applicant. Women will pay more for car insurance, while men approaching retirement will receive lower incomes as a result. This decision, which is aimed to make a level playing field for men and women, has caused a deal of controversy and has been referred to as a 'horrible mistake' by industry insiders.

Based on the same pension pot, women have historically received lower annual pensions than men because the annuity rates they are offered take into account the fact that women generally live longer. Meanwhile, female drivers have paid lower motor insurance premiums because statistics show that they are less likely to be involved in accidents than male drivers. Both practices were based on historic data and common sense. However, both these practices have now been ruled illegal by the ECJ and companies have until December 21 to change their system to gender-neutral rates.


For men who are approaching pensionable age this could result in an £8,000+ hole in the amount they receive over the course of their retirement. Early calculations seem to indicate that the annuity rates for both and women will be slightly better than female rates but significantly worse than current male rates. Swings and roundabouts! This may result in more people opting for alternatives to annuities, such as income drawdown and for providers to respond by adopting individualised underwriting that allows them to base prices on a specific client, thereby circumnavigating the ECJ decision. There will be deals to be had, but if you don't dig deep you may end up with a homogenised, standard-issue annuity which will probably offer a less than enticing deal. If you are approaching retirement – shop around.


The ECJ ruling is almost certain to mean that young female drivers will see an increase in their motor insurance premiums from December 2012. Until now, these motorists have paid less than young male drivers because data proves they have lower accident rates – and therefore lower costs. The average 18 year old male insurance claim cost is around £4,400 – compared to a typical 18 year old female claim cost of around £2,700: male drivers under the age of 21 are also twice as likely to be involved in a crash. No wonder parents worry! However, when you look at the figures it seems fair that those most likely to claim should pay more in premiums, but this is no longer to be.

Women will now have to pay the same premiums as men of the same age and driving experience – meaning their costs could soar by up to 50%. Unisex rates will have to apply for motor insurance, the ECJ has ruled – and the resultant outcome is likely to be an increase for females which could typically be as much as 25% and in some cases will top 50%. However, it is unlikely that premiums for male drivers will reduce much as their risk is still considerable – and no amount of EU legislation can change what statistics has proved.

In short, insurance companies will now lose the ability to use gender to calculate risk based on irrefutable evidence and statistics. Of course it will be the consumer who will suffer: prices will go up across the board as insurance companies try to build in the new risk – probably resulting in everyone having to pay a higher rate.

Make sure get the best possible advice when it comes to motor insurance, talk to Westhill Insurance Services – we can't change the ECJ ruling, but we will be able to provide premium savings. There are many influencing factors when taking out motor insurance and if you give Westhill Insurance Services the full picture; they will help get you (or your expensive kids!) on the road at the best possible premium. We have to stick to the letter of the law, but we can make the process quick, efficient and as straightforward as possible.

Contact Westhill Insurance Services, today.

Posted on 8th March, 2011