As the Government consults on the introduction of rules banning the use of gender as a factor when setting insurance premiums, Deloitte, the business advisory firm, comments on how the ruling will affect insurers.
James Rakow, insurance partner at Deloitte, said:
“The European Court of Justice in March ruled that insurers could not use gender as a risk factor to price insurance premiums with effect from 21 December 2012. These changes will potentially have a huge effect on premiums for a wide range of policies including car insurance.
“Insurers will have to change their pricing models. This is both an opportunity and a threat – those who already use state of the art technology and innovative sources of risk data may take this in their stride. Those who are disadvantaged by legacy systems and poor quality data may be left behind. In motor insurance this is also likely to lead to a speeding up in the adoption of telematics which will provide other valid criteria against which rating can be assessed. Clearly we will all have to wait for the results of the consultation to know just how challenging the ban will be for insurers”
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