Here’s the thing: In a perfectly fair system, the insurance companies would specifically analyze each individual client, and on the basis of such personalized analysis, determine the probability for that particular client to be in an accident, and the expected cost of the damages of such an accident, and then have completely personalized rates to cover that. But of course, that would be wholly impractical. So the insurance companies instead try to come as close to that as possible, by setting up objective categories. To make it as close to the perfect system as possible, they need as much information as possible. The reason that they base their rates, in part, on gender, is that gender is part of what determines an individual’s risk. With no other information to go by, a male is indeed more likely to be in an accident than a female.
Now, maybe there is sexism here, but it’s not on the part of the insurance companies. If you want to blame someone or something, blame the aspects of our society which encourage males to drive more dangerously.
Shouldn’t they base accidents on a per-capita basis? The reason men get in more accidents is because men drive more than women do. Men and women might have the same number of accidents per 10,000 miles of driving but because men drive more it skews the statistics against them.
The biggest complaint I have about being charged more of being a guy is that unlike ANY OTHER FACTOR, there isn’t much I can do about my gender (under practical limitations). I can get older, move other places, get a safer car, etc but I’m always going to pay more becasue I’m a guy.
Doesn’t this make the case that men should be charged more for insurance? Using the number of miles travelled per year as a factor in determining insurance seems reasonable. It’s impractical for an insurance company to measure this per customer, but if they can characterize that men drive more miles on average, it makes sense to charge men more. I have no idea whether your assertion that men drive more than women is true, but if it is, it’s not helping your case that men shouldn’t be charged more.
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Huh? I’ve been on several different health plans and I’ve never seen where women pay more or are offered less coverage.
I don’t doubt what you say as the insurance plan our company currently uses bases the rates soley on age and number of dependents covered. However, our prior insurance company charged a slightly higher rate for females, did not cover PAP tests, mammograms, birth control, or tubals. Mammograms and PAP’s were covered only in women over 50. But, PSA blood tests, vasectomies, & prostate exams were all covered for men of any age. That was a big issue with us and thus we eventually switched. I’m sure most companies do not practice this particular type of discrimination. Frankly I do not know how they were able to get away with it.
IzzyR, you’re right. What I should have said was that it’s based on a combination of frequency and severity rather than frequency alone. But my point was that the higher rates for males (at my company anyway and I don’t think we’re unusual) aren’t based on severity.
You don’t understand. One of the reasons men get in more accidents is because they drive more. That doesn’t necessarily make them a greater risk for getting in a car accident.
Actually, my insurance company takes mileage into account, so I benefit from the fact that I don’t drive as much as some people, but I’m penalized for being male.
I think that he does understand. Lets just make some numbers up to prove a point. If the average female drives 10,000 miles per year and the average male drives 20,000 miles per year then it doesn’t matter from an actuary’s standpoint that both have the same accident rate per mile driven. Assuming that this rate is the same for both sexes (which it probably isn’t) then the male is twice as likely to get into an accident that costs the insurance company $$$.
If the insurance company is just using a male/female differentiation only then this can be considered at least somewhat fair. The most appropriate model would be to charge cutomers be miles driven and then figure in other factors. Some insurance companies do, in fact, charge low mileage customers less than regular customers but as other posters have pointed out, a completely individual actuarial risk profile for every customer is both impractical and likely impossible from a forecasting standpoint.