General Insurance Article - Young female drivers hardest hit by EU gender directive

 The latest Confused.com /Towers Watson Car Insurance Price Index reveals the average quoted comprehensive premiums for 17-20 year old women rose by a staggering 20.7% across the UK over the last 12 months. This is the biggest yr-on-yr jump from one quarter to the next the industry has ever reported (+19.3%).

 As a result car insurance premiums for females of this age group are at an all-time high (£2,256). In stark contrast, quoted prices for 17-20 year old men fell by an average of 21.6% over the same period.

 Young female motorists have traditionally enjoyed much lower car insurance premiums than their male counterparts, due to the fact they are statistically less likely to make a claim. However under the EU Gender Directive, which took effect on December 21st 2012, insurers are no longer able to use gender as a factor when pricing insurance.

 The average comprehensive car insurance price now stands at £736 as of Q1 2013, compared with £816 this time last year, a yr-on-yr decrease of £80 (-9.8%). For Third Party Fire and Theft cover only, average premiums for Q1 stood at £1,169, showing a slight increase of 1.0% yr-on-yr and a further increase of 2.7% quarter on quarter.

 The gender divide
 In Q1 2013 men paid £748 on average for their comprehensive car insurance premium, a reduction of 13.9% compared to the same time last year. Women enjoyed a less impactful drop in premiums, paying £721 on average, a 3.9% decrease over the same period. As a result of these price changes, the difference between men and women’s car insurance premiums on average now stands at just £27. This is a huge contrast to price differences seen this time last year, when men were paying £117 more than their female counterparts on average for their car insurance (£868 compared to £751).

 However, a larger price gulf remains amongst the younger age group, which currently sees 17-20 year old males pay £2,848 on average for their comprehensive car insurance premiums, with females of the same age paying £2,256 – a price difference of £592. However this price gap has reduced dramatically over the years, with the biggest difference seen in Q1 2011 when men aged 17-20 paid £1,787 more on average for their car insurance than women. (£3,798 compared to £2,011).

 Whilst over the last year both men and women have seen decreases in their comprehensive insurance premiums, over the first three months of 2013 women have in fact been subject to significant price rises. Overall women have seen a price increase of 2.2% over the last quarter, with men experiencing a decrease of 1.8%. Women aged 17-20 have experienced an even steeper increase of 13.6% over the last quarter, compared to men of the same age who have seen a 3.8% decrease. This may be due, in part to the EU Gender Directive, which came into force on the 21st December 2012.

 Despite being subject to hikes in car insurance premiums at the start of this year, women still enjoy lower prices overall than men.

 Regional vital statistics

 The Confused.com/ Towers Watson Price Index also reveals that the biggest quarterly price hikes are taking place in the North East- +1.4%, the North Midlands- +1.0% and the North West – +0.9%.

 However, despite increases in these regions, it was women aged 17-20 living in Northern Ireland who took the biggest yr-on-yr hit on premiums. Women in this area experienced car insurance price rises of a whopping 34.1%, compared with a 17.1% decrease for men. Women of this age group in the South West were also hit by huge price hikes in car insurance premiums, facing an increase of 23.2%. By contrast their male counterparts saw a decrease of 19.2%.

 At the opposite end of the spectrum men aged 17-20 in the North East and Manchester/ Merseyside areas have had enjoyed significant price decreases of 23.8% on average. However, while insurance premiums continue to fall for this age group they are still left facing huge costs of up to £4,215 in the Manchester/Merseyside area for their insurance premium.

 On average car insurance premiums have fallen by 9.8% yr-on-yr for the UK as a whole, however one area bucking this trend is the Scottish Hebrides, where motorists experienced a price increase of 1.1% over the past year.

 Despite this being the only area in the UK to experience a yr-on-yr rise it still does not boast the most expensive comprehensive car insurance premium. This label falls to East London, where the average cost of a car insurance premium stands at £1,519. This is closely followed by premium prices in Ilford, Uxbridge, and NW London areas where motorists can expect to pay in excess of £1,300 on average.

 In contrast, the Scottish Borders and North and North East Scotland enjoy the lowest comprehensive car insurance premiums paying on average £497.

 Gemma Stanbury, Head of Car Insurance at Confused.com says “With the EU Gender Directive coming into effect late last year, it’s clear to see that the insurance industry has reacted to the change in legislation over the last quarter.”

 “The most recent results from the Confused.com Car Insurance Index reveal, as expected, that women have experienced the greatest increases to their car insurance premiums. As a result, women aged 17-20 are now facing record prices of £2,256 on average for their car insurance. At the opposite end of the spectrum, their male counterparts are enjoying huge price decreases of up to 21.6% as the industry attempts to level out car insurance prices.”

 “However with the emergence of new technologies such as Telematics, motorists who can prove that they are careful behind the wheel can afford themselves discounts on their premiums, regardless of their age or gender.”

 “Our advice to drivers is simple, with gender neutral pricing now having taken full affect, the need to shop around for the cheapest car insurance deal has never been greater – for both men and women. For the many female motorists facing sharp price hikes now is the time to compare prices to ensure they’re getting the cheapest deal possible. Similarly for those men who now find themselves eligible for hugely discounted premiums, it may be worth shopping around for a new policy which could save them a considerable amount of money.”