Car insurance news

Direct Line warns female car insurance may increase by £500 per year

Direct Line research has revealed that under the proposed new EU Gender Equality Directive, young female drivers could see their car insurance premiums rise by £500 per year.

Direct Line say at present, car insurance rates are based on a number of different factors including driving history and experience, gender, age, where the car is kept and what kind of car is being insured.

The planned EU directive argues that insurers are discriminating against women by using gender as a rating factor in car insurance premium calculations. However, Direct Line data shows that overall young women have lower claims costs than their male equivalents. So by removing the ability to use gender as factor in calculating insurance young women would suffer higher insurance premiums as a result of the proposed Directive becoming law in the UK .

If the EU Directive became law, Direct Line say the group that would suffer the most would be young female motorists between 17 and 24. Older male drivers over the age of 80 would be the next hardest hit. According to Direct Line research males over the age of 80 could see rises of £100 on their premiums.

This table shows what would happen to a standard risk premium should the law be introduced:

Age	Male Premium	Female Premium	Under new law
17	£1951.95	£1293.60	£1800
25	£393.75	£355.95	£380
40	£307.65	£326.55	£320
80	£429.45	£565.95	£520

Further research by Direct Line also shows the vast majority of motorists believe that the present way insurance is worked out is the fairest, with only 1% saying that everyone should pay one price regardless of age, gender, experience and driving history.

Direct Line additionally conducted research into consumer awareness on the proposed Directive and found that nearly 90% of all motorists haven't even of heard of the proposed new law.

Many motorists questioned didn't know that gender made a difference to your premium in the first place, however when the proposed new law was explained over two thirds of motorists thought on average it would increase car insurance premiums. This is because insurers would not be able to tailor the premiums objectively to the individual.

Consumers surveyed were generally happy for insurers to objectively tailor premiums with 83% stating it is fair to use factors such as driving experience and age. Although drivers under 25 tend to pay the highest premiums, over two thirds of these motorists agreed that using these kind of factors was the fairest way of working out premiums.

However, given the choice, the vast majority of consumers felt it was fair to rate insurance based on the individual, with only 1% saying that everyone should pay one price regardless of experience, driving history, age or gender.

Emma Holyer, Motor Spokesperson, commented: "Direct Line believes it is only fair that you pay a cost for your insurance that reflects your likelihood of having an accident.

"Here in the UK we have sophisticated methods of calculating insurance that ensure that motorists pay the premium that reflect their driving skills. Our research shows that the public supports the present way insurance premiums are calculated.

Introducing this law would be a step in the wrong direction and there really is no need for change. Motorists are happy with the present system, and agree it represents the fairest method of calculating premiums. The way the market works at the moment means motorists get the best value for money on their car insurance."

Source: Direct Line

Get a cheap car insurance quote now!