MSE News: EU ruling could throw insurance pricing into chaos

lisyloo

Incidentally it's a terrifying thought to think that you could have been driving carefully for nearly 4 years only to then be involved in a minor accident and then have to start all over again with your no claims bonus, meaning these 4 really high premiums count for nothing.

That's not right.
You loose 2 years if it was a fault claim.

lisyloo

But, statistically speaking, the insurer doesn't know that until you have proved it by doing so!

You're right.
With new drivers they cannot go on your experience.

lisyloo

I just meant I don't passionatly care about life insurerae as I do for car insurance

Asuming you don't want to live off benefits in retirement then you WILL care.
The annuity issue is a big one too.
At the moment men get a benefit because they don't live as long as women and therefore the income they are provided with can be bigger per month (as it's provided for fewer months).
If this goes through then this discrmination won't be allowed and you'll effectively have to subsidise women who also get to live longer as well.
I'm only saying this to show both sides of the coin.

lisyloo

Insurance must be the only industry in which these kinds of discrimination are not only allowed but encouraged!

Life insurance, sickness insurance, pension annuities are all affected by gender.
I don't know what you mean by encouraged.

Once the ruling goes through, does anyone think there will be any kind of 'back-cases' for claims of illegally discriminating against male drivers in the past?

No. It was legal in the past and standard.

mikey72

lisyloo wrote: »

No. It was legal in the past and standard.

So was not giving prisoners votes.
They'll still be getting compensation.

JaspaC

That's not right.
You loose 2 years if it was a fault claim.

Really?? This sounds a little better. But neither of the insurers I have spoken to have verified this (Endsliegh and direct line). Are you sure this is deffinetly true for all policies (given that the no-claims can't be protected under 4 years).

You're right.
With new drivers they cannot go on your experience.

exactly, so the insurer has to either take the risk (with an appropriate price) or not offer insurance. This isn't really an excuse to use gender discrimination.

I just meant I don't passionatly care about life insurerae as I do for car insurance
Asuming you don't want to live off benefits in retirement then you WILL care.
The annuity issue is a big one too.
At the moment men get a benefit because they don't live as long as women and therefore the income they are provided with can be bigger per month (as it's provided for fewer months).
If this goes through then this discrmination won't be allowed and you'll effectively have to subsidise women who also get to live longer as well.
I'm only saying this to show both sides of the coin.

I didn't mean that I'll never care about it, I was just trying to explain why I hadn't argued against it in my post (which was that I am currently impartial to it).
Yes as you say I imagine that I will care about it in future, and there are some interesting arguments above about not being able to control your life span influences caused by gender but being able to control your driving habits.

Even when considering all of the above. I am still very much on the side of introducing the new law. Why should women have to pay more for life insurance just because "statistically" they will live longer? That doesn't mean that all woman will live longer than men, that's a completely unfair system! It's ridiculous that these kind of things are allowed to be used as discrimination for a business's customers all in the name of profit! Disgusting!

Obviously it may have balanced out for the average male perhaps (car insurance extra vs life insurance discounts etc..) but not if the ruling comes in, having just paid my most expensive car premiums of my life already! Hence I think any claims cases wouldn't be completely unreasonable.

JaspaC

Quote:
Insurance must be the only industry in which these kinds of discrimination are not only allowed but encouraged!
Life insurance, sickness insurance, pension annuities are all affected by gender.
I don't know what you mean by encouraged.

I said the insurance industry not specifically car insurance. And I mean encouraged as no ones intervened with it in the past and companies are encouraged by circumstances to further discriminate to be competitive and increase profits.

lisyloo

Are you sure this is deffinetly true for all policies

No, it would be impossible to make claims on the policies for every single insurer.
I would be happy to say it's normal.
If you have a "non-fault" claim e.g. someone rear ends you and is 100% liable then your NCD is restored when the money is recovered from the other insurer.

It's ridiculous that these kind of things are allowed to be used as discrimination for a business's customers all in the name of profit!

I'm being cynical but do you really think these businesses will be willing to make less profit if the law changes?
Personally I don't.
It may be more fairly distributed, but if anything overall I think prices will go up.

I didn't mean that I'll never care about it, I was just trying to explain why I hadn't argued against it in my post (which was that I am currently impartial to it).
Yes as you say I imagine that I will care about it in future, and there are some interesting arguments above about not being able to control your life span influences caused by gender but being able to control your driving habits.

Fairy snuff :-)
I just wanted to make people aware that this isn't just about motor insurance.
It is much more far reaching.
The one I see as biggest is the pension annuity as that's what people live off for a significant part of their life (although you don't HAVE to take an annuity until 75 until current legislation).

Underwriter

I work in the team which sets the underwriting philosophy for a large life insurance company in the UK. There are two of us who have been working full time on this issue for the last three weeks, and our entire pricing actuarial team has been doing so for a lot longer – also the marketing, claims and sales departments are heavily involved, to say nothing of the huge systems requirements that have been worked on in readiness for a change in the law on 1st March. I therefore feel well qualified to comment on this, I know Advocate General Kokott’s arguments inside out as well as the ABI’s rebuttal of her opinion, as well as the general insurance industry response.
Most of the opinions expressed on here are extremely naive and I have to admire lisyloo’s patience in answering them.
First of all, we cannot possibly afford to reduce male premiums to the female level we currently charge (this also applies to car insurance). The increased cost of claims would wipe us out before the year end. One option, as we would not be allowed to differentiate, is to charge the current male rate for everyone. I do not think this was Kokott’s intended outcome, nor the European Women’s lobby group that have supported her, but then they have completely no idea of the financial dynamics of insurance companies. In actual fact we are likely to see a very small reduction in male rates and a big hike in female rates. One consequence of this could be that men, who already are a higher risk in general, will cancel their existing policies in favour of the cheaper new premium, while a % of women will cancel their policies because they can’t afford them or just don’t like the increase. We will therefore have a book of business which becomes weighted towards lives which tend to claim more ie men. This means that everyone’s premiums will go up again as the lower price will be unsustainable. This isn’t restricted to life cover which is a cheap commodity, but to the more expensive critical illness and income replacement policies.
Of course as lisyloo has repeated many times, men’s annuities will also decrease to be more in line with current female rates and a similar spiral will happen as in insurance.
No one will have an advantage, everyone loses.
The entire insurance industry is looking on with utter disbelief that it has gone this far. Discrimination is wrong, but differentiation isn’t. To take it to the extreme, when underwriting males and females there are differences in certain conditions – obvious ones like breast, ovarian and testicular cancer, perhaps less obvious such as heart disease, and ones which might come as a surprise to the layman like multiple sclerosis. To give an example, if a woman has a family history of breast cancer she is more likely to contract breast or ovarian cancer herself, so she will be charged an extra premium for critical illness. Now we are going to have to charge an extra premium for men as well, for cancers they are statistically not going to get. (Yes, men can get breast cancer but obviously they won’t get ovarian cancer, and the stasticial risk of breast cancer in men with a family history is negligible).
While I don’t expect everyone to have an in depth knowledge of insurance or actuarial data, it astonishes me that one woman thinks she knows more than the entire world's insurance industry when it comes to calculating premiums.
By the way to those who think this is somehow going to be to the insurance company’s advantage and swell their profits (the ones which the shareholders demand), does it not occur to any of you that this is an intensively competitive market and any company which artificially hiked up its premiums would be dead in the water? The profit margin on insurance is miniscule. And before anyone suggests it, anti-competition laws mean that we can’t collude to keep premiums high (not that any company would want to or has ever suggested such a thing).
There have already been murmurings about age discrimination. Mortality rates are higher for men at all ages, not just because women live longer. If we can’t set premiums by age then I can absolutely guarantee it will be the end of critical illness and disability cover, it almost certainly spells the end of the life insurance industry, and the only thing that will keep the motor industry going is that it’s compulsory although so few people will be able to afford it that I can’t imagine what is going to happen.
Stop looking at your own narrow circumstances. People who maintain they are good drivers and should therefore have their premiums make me laugh although not in a humorous way. Perhaps you think the insurance company should personally interview and risk assess every one of you? Or do you think the risk taking drivers are going to admit to it and pay a higher premium? Again it’s a highly competitive market, if one company could find a way of insuring a group of drivers cheaply and profitably then they would. But while the claims continue to roll in their stance is justified. It’s called “pooling risk” and is the basic tenet of all insurance, there is no way of operating otherwise.
Finally, in the claims and underwriting world, we actually do care about our customers, and the feeling of outrage that we all have at this insane ruling is the knowledge that we will now be treating our cutomers unfairly and be forced to make ridiculous decisions because we can't base them on gender any more, rating men for breast cancer is a prime example, as well as charging women higher premiums than can be statistically justified.

Percy1983

To be honest I don't mind if my car insurance doesn't decrease, knowing a women in the same situation will pay the same will feel much better, sounds perfectly fair to me.