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Higher premiums are a small price for equality

March 1, 2011

Let me start by saying that I am not a sexist. Some of my best friends are women.

I am, of course, being facetious. I am also quite annoyed. I have been watching a lot of talk in the media and reading news articles about the recent Test-Achats judgement at the ECJ; it is the judgement on insurers’ ability to adjust premiums on the basis of gender. And it seems to me that nobody is talking about some astoundingly enormous elephants sitting in the room, having tea.

First of all, I must take exception on how the matter is being reported. The dumbed-down version claims that “[i]nsurers cannot charge different premiums to men and women because of their gender, the European Court of Justice (ECJ) has ruled.” This is not so. It is actually a 2004 Directive, discussed and approved by the European Parliament, that says that. The directive provided member states with the ability to make an exception in certain circumstances. These exceptions had to be reviewed by December this year. The directive, however, unusually did not give a maximum time-frame within which they should apply. All the ECJ has said today is that the December deadline will apply to the exceptions. In short, point A: There is a lot of hoo-ha about something that was decided within the legislative framework of the EU many years ago.

Secondly, the flip side of the ruling is that women will get significantly larger actuary pension payments and men smaller. This seems to merit a lot less space in every report I have read. Perhaps because the pinch in the pocket of the majority of women right now is more newsworthy than the benefits many years down the line. Or perhaps because the idea of “evil Europe” being to blame for everything – yawn! – is still fashionable in some quarters.

But my major gripe is simply that the ruling is absolutely right. Not only that, it is a big step towards equality. The upsetting undercurrent of nobody saying this, is that we would all like equality, it seems, but only if it costs nothing.

Statistics being used to fuel stereotypes are deeply unhealthy – period. Let me flip the scenario for you. Let us say an insurance company gathers some statistics based on race and there is some significant statistical variation. Would it be all right to have lower premiums for Asian drivers? How about companies that only insure Asian drivers and whose advertising campaign was based on the grossest of stereotypes? Are we still OK with that? Whites-only insurance companies? Gay men paying more than straight men? At which point does it become offensive?

What if I am a transexual who has gone through gender reassignment and acquired the proper certificate under the Gender Recognition Act 2004? I am no longer a man in the eyes of the law. I belong to a different statistic. My premiums might drop 25%. I am not a better driver, of course.

At the core of the struggle for equality, be it race, sex or gender must be a willingness to make sacrifices and take the rough with the smooth. Most discriminatory assumptions can find support in statistics. To accept one such assumption, is to open up oneself to others. We cannot pick and choose which generalisations suit us and which do not. And the depiction of women as pink-sequin-covered, boa-wielding Shielas in the advertising of such insurance companies, proves that amply. This particular bit of the path to equality may not be to your liking, but it is a minor inconvenience compared to chaining oneself to railings or being shot at in a Tripoli street.

What everyone ought to be talking about is the need for very strict regulation during the transition, so that insurance companies do not use this ruling as an excuse to bring women’s premiums up without reducing men’s or reduce men’s annuities without increasing women’s. Also, a move to a system that rewards actual rather than perceived good driving for individual customers. This is not man versus woman. It is big business versus consumer.

And so, my sisters, look on today as the victory that it is. The removal of yet another assumption based on gender generalities.

8 Comments leave one →
  1. Jim permalink
    March 1, 2011 7:29 pm

    I agree and surely the same should be done for young drivers who get discriminated against. If you 25 and a new driver you will be charged less than if you’re 17.

  2. Justin permalink
    March 2, 2011 12:05 am

    There is a danger that in 20 or 30 years time this judgment will be seen as utterly daft as the Scopes monkey trial was in USA.

    Whether that is the fault of the ECJ ruling or the law they had to interpret will ultimately be lost in the derision that the ruling will apply.

    Things such as car insurance and pensions insurance have to be calculated based on science not airy fairy subjective twaddle about human rights and equality.

    What should be the case is that where insurance companies wish to apply different premiums based on gender (whether that is car insurance, health insurance, pension annuities or anything else) they should be required to show two things

    (1) the statistics showing that there is a difference in outcomes depending on gender is robust and objective AND

    (2) gender is a causation link rather than mere co-incidence

    So (and not being a scientist this may come out wrongly) if statistically a 17-25 year old male drivers are more likely to make an insurance claim (even after allowing for the obvious factors such as alcohol consumption) than a 17-25 year female driver and the reason for that statistical correlation (or one of the reasons) is that the testosterone in young men encourages more risk taking than women then it seems reasonable that young men get charged more for insurance

    Robust science should determine insurance premiums not subjective notions of human rights and equality… but sloppy science used as a cover for discrimination should be rigorously exposed

    • March 2, 2011 9:52 am

      The (a)mount of abuse I have received over this post is extraordinary. The idea that in certain fields science should apply unhindered by ethical principles is an incredibly dangerous one (as is the notion that young men do bad things because of testosterone). I do not believe that there is a uniform group called “British Women” or “British Men” and that they behave in a homogeneous way.

      The better male drivers should enjoy low premiums along with the better women drivers. The bad drivers of either sex should be paying more. That is my simple, airy-fairy, twaddle logic.

      In any case, what you say does not explain why the debate was not had at the point when it mattered in 2004. I have a possible explanation: It is because the Daily Mail didn’t tell the British Public about it then. They decided to tell us about it now, because it is much more in keeping to whinge and heckle from the sidelines and blame a faceless EU than engage in real political debate.

      • James permalink
        March 5, 2011 9:26 pm

        I think your idealised version of how this will play out is based upon an incorrect assupmtion the their are equal numbers of men and women.

        As there are less men than women in the country (when they reach retirement age) the average annuity at retirement will decrease for women more than it will increase for men.

        This is not “evil” insurance companies it is an actuarial fact and will ensure that no one wins with this.

        The above reasoning also applies for younger drivers as their are more young males than females and so the average premium will rise for all.

        The figures for this are taken from the last census for England and Wales

      • March 5, 2011 10:10 pm

        The whole point of my idealised version is that equality is worth the cost, so there is an explicit recognition of the actuarial facts. Wheelchair ramps also cost money.

      • November 19, 2012 4:41 pm

        I am a 22 year old, middle class, white male and I pay a lot for my insurance (actually I don’t as I ride a motorcycle hence so my premium is rock bottom – you only kill yourself on those things). I find it ridiculous however that this initiative is being allowed to take place for the reasons that James and others have mentioned – insurance is a question of price and risk and to undermine those principles is nothing short of farcical.My main gripe however is with is your notion that trying to create “equality” at any level is okay. Equality is generated from the fundamental rule that applies to everything in life, that every action has an equal and opposite reaction. Women and men are fundamentally different and the rules cannot apply to both. Raising the wage that women are paid in certain pay brackets (dinner ladies and bin men for instance) to equal men (see Abdullah (and others) vs. Birmingham Council 2012) may seem like a good idea but people fail to see the repercussions. They do not take into account those bin men or male blue-collar workers in this instance, who are the primary providers for their household and who find themselves unable to pay the bills. Nobody thought of that did they. If being more obscure, you could conclude that the coffers of Birmingham Council will be reduced by having to pay unexpected wage hikes that certain things such as road maintenance are left unchecked resulting in fatalities. The deficit may alternatively result in some homeless shelter being underfunded and closed down etc etc. The situation is so complex and there are an infinite amount of things consider and it is naive to believe that striving for unbounded equality will make things better all round,

  3. July 8, 2011 12:37 pm

    Hello, Neat post. There is a problem together with your web site in internet explorer, would check this? IE nonetheless is the market leader and a huge element of other folks will miss your magnificent writing because of this problem.


  1. One month until women pay the same insurance as men | MotorQuoteDirect – Car Insurance Blog

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