ECJ rules: European insurers can no longer charge different prices because of gender

Click here. To whit:

The ruling is also expected to affect annuities and pensions, where women receive less per annum for the same pot of money, due to their longer lifetimes.

Is this a good or bad thing? Personally, as a young male who has been gouged by car insurance prices since I learnt to drive, I’m quite pleased. I may have radically different thoughts if I was a retirement-age male, though, who now stands to lose a substantial amount of money from any annuity that I’ve purchased.

Hopefully people who have already bought an annuity won’t lose anything. It is people who are going to retire after December 2012 who will be offered a lesser rate when purchasing the annuity, or taking a cash lump sum on their work pension.

On the insurance thing, I bet you won’t notice that much difference, it may go down for men a bit, but it will go up a lot more for women.

I don’t know. The insurance market is pretty competitive. Hopefully we’ll see a bit more than the 10% saving that they’re predicting for men. Even 10% of £2000+, which is what it costs to insure a young male driver on even a small engined car, will be quite a saving, though.

Anyone who has already fully vested their pension fund will be unaffected. It’s a one-off product purchase for most people.

I bought my insurance at 24, and it was only 70-odd quid a year. Okay, it was for a motorbike, but still… crashing a motorbike at 60 mph can do a lot of property damage. And you don’t even need a full licence to ride one. Two wheels good, four wheels bad.

Huh. I was under the impression a Y chromosome was a pre-existing condition.

It’s a bad thing. Generally, women drive more responsibly, so why shouldn’t they pay lower premiums?

Presumably because it is discrimination by group. And women may drive more responsibly, but charging different premiums for it penalizes the men who do drive responsibly for an offense they aren’t committing.

Does *every single woman *who drives a car drive more responsibly than every single man? :rolleyes: Just because a bunch of other men do something wrong why should I be punished for it? It’s not like I can control my sex (at least not without major surgery) Say a certain racial group, in general, drove less responsible than another racial group. Would it be fair to charge every member of the first ethnic group higher premiums merely because they were members of that racial group?

Definitely not.

We could also ask “Does every single 45-year-old person drive more responsibly than every teenager?” The answer is just as obviously no. Yet teenage drivers have a significantly higher accident rate, and so pay higher insurance premiums.

How about “Does every single 90-year-old die sooner than every 50-year-old?” Does the fact that the answer is obviously no mean that they should pay the same for life insurance?

Insurance, alphaboi867, is always based on statistics. In the U.S. (I don’t know about Europe, so perhaps I am wrong to make the above statement about a European policy), woman are statisically better drivers. To paraphrase your above question, why should the majority of women be penalized because they, as a group, are safer and better drivers than men?
To answer your second question, if blacks can be shown to be better and safer drivers than whites, why should not they not receive lower premiums. They are causing fewer accidents, as a group, so why should they not benefit, as a group?

Insurance policies are always going to be based on statistics (and what the companies can gouge out of the public), not comparisons of one individual to another. Individuals are not predictable, but the aggregate is.

If men are unhappy about this, then they should raise their sons not to be assholes behind the wheel.

No they don’t. Women have more accidents than men per mile. There’s a difference between claiming that men drive on average 75% more miles than women and hence more likely to get into an accident (which is a fact) and claiming that women are more responsible than men (which is a load of tosh).

Then from your own statement Capt. Ridley, women have fewer accidents than men. Therefore, their premiums should be lower.

Sure, I agree. I was just correcting your erroneous claim that women are more responsible drivers. They aren’t. They have more accidents statistically per mile driven. If we’re going to take everything into account when building our risk model, then gender should be included. But then, so should things like race, age, social class and other things outside your control. As it was prior to the ECJ ruling, certain things could be used when calculating risk, but others couldn’t despite there being no qualitative difference in my mind between discriminative pricing based on race and discriminative pricing based on gender. The time to complain about courts preventing insurance companies from using certain traits of their customers for calculating risk isn’t now, it was back when calculating risk based on race was outlawed.

Here’s the thing, insurance companies exist to make money. Part of their business model is insuring that they’re charging the right rate for the insurance they offer. They do this using actuarial analysis; the closer they get to being right, the higher their profit margin. For an insurance company the simple profit/loss equation is ([Premiums] + [Investments]) - ([Sales Costs] + [Incurred Losses]) = Profit

Investments meaning how much they make off that huge pool of premium money they collect and hold (they don’t just hold it in stasis, they make massive investments with those premiums.) Sales Costs are similar to the COGS of most other types of business, basically it’s the cost of selling the product, cost of paying actuaries, cost of setting the rates, basically the cost of all the dudes who wear suits and are employed by the insurance company.

If insurance companies don’t set their rate using the actuarial tables, then things get very dicey. For example they could be charging a very low rate for something that has a high risk of occurring and will be very costly if it does. This can create a situation in which the insurance company makes no profit and goes out of business, or worse, it doesn’t have even enough money to cover all of outstanding claims made by policyholders (the equivalent of going to the bank and finding out they can’t honor the amount of money in your savings account–luckily something the Federal Gov’t has insulated most average Americans from experiencing.)

When you start monkeying with the actuarial side of it, and say that insurance companies can’t charge a woman less because the actuarial tables say she’s less of a risk, that just means the insurance company is no longer acting as efficiently. It might mean a moderate reduction in rates for men and an increase in rates for women. But its “societal effect” is society as a whole will be paying in aggregate more premiums. Because instead of being able to ride closer to the ragged edges of the profit margin (because competition pushes all prices downward in most scenarios), in aggregate the insurers will have to collect more money overall to make up for the fact they can’t charge rates that are aligned with the actuarial science.

I know little about the insurance business, I’m shocked they are expecting a 10% savings for men. Insurers will not insure someone if they expect based on the actuarial science that the person will cost them more in incurred losses than they will bring in via premiums, that’s just not how they operate. So if insurance companies are even capable of reducing male rates by 10%, it means they were operating at a margin over and above the the minimum to a degree much higher than what I expected. Like I said, I know little about the insurance business. My expectation was that competition has mostly pushed premiums down as low as the insurance companies can go (and still be following the statistics), because the insurance companies are mostly just interested in maximizing volume of customers–higher volume means more investment money, and I always assumed turning a profit on the invested premiums was the real powerhouse of insurance company business.

If that wasn’t the case, and they’re lowering male rates by 10%, then I guess a bigger portion of insurance profits come from premium markup than I had anticipated.

I’ve always been against insurance based gender discrimination. Age I can wait out. I’ll get my fair share of 45 year old premiums when I’m 45.

However what amount of time will change my gender? None. I was born male, I’ll die male. It’s as immutable as my race.

Why should I be discriminated against? How is this any more acceptable then basing premiums on race?

You can’t base premiums on race because you can’t define races objectively. So, your insurer will create an actuarial table on the basis of, say, self-identification. On this basis, it will determine that, say, Hispanics, have less accidents overall and will propose a lower rate to Hispanics.
Now, you’re seeking an insurance. The form asks what race you are. What are you going to write? Writing “Hispanic” seems like a good idea, doesn’t it? And how will the insurance company determine whether you’re actually an Hispanic or not? It can’t.
So it doesn’t matter whether or not it’s acceptable to base premiums on race because it’s impossible to do so.

I think slightly higher premiums overall are a small price to pay for more gender equality.

Perhaps.

But then you’ve changed the nature of insurance from being based on actuarial analysis to the politics of the moment. Groups with political power are thus encouraged to seek favorable treatment. The result can be losses that threaten the viability of the entire scheme (perhaps requiring govt. bailout).

In short, the law of unintended consequences will likely apply here.

Guess that’s the end of Sheila’s Wheels then.