James Daley: Let's put the brakes on discrimination
Saturday 16 August 2008
The volumes of anti-discrimination legislation that have passed through the corridors of Westminster and the European Union over the past few years are undoubtedly a good thing. Companies who try to pay employees less because they're female, disabled, black or gay are likely to end up paying out thousands in compensation if a proven case ever gets to court. Likewise, it's thankfully much harder to dismiss people because of their age or any other personal reason.
Until recently, however, the anti-discrimination movement has largely kept away from financial services. Car insurers, health insurers and life insurers have been pricing their products based on the sex of their customers for many decades, but no one's been too bothered, perhaps because the statistics were always unequivocal.
Women, for example, have always been lower risks for car insurers, as the average value of their claims is much lower than those made by men. This is apparently because, though women have more crashes than men, they tend to be relatively minor ones. Men, on the other hand, have fewer but more serious accidents – and are far more likely to write off a car, or worse. As a result, there are even specialist car insurers, such as Sheila's Wheels, which operates primarily for female customers.
When it comes to life insurance or pension annuities, the statistics are similarly unambiguous. Women's life expectancy is more than five years greater than men in Britain, which is why women will pay less for their life insurance but more for a retirement annuity.
A few years ago, the European Union started to look at these pricing differences, but was eventually persuaded to leave British insurers alone. Over the last few years, however, with age-discrimination legislation back on the agenda, the debate has surfaced again.
Political pressure has so far rightly stopped insurers using the results of genetic tests to price life- or health-insurance policies, and has rightly prevented providers taking account of their customers' sexual orientation as well. But while I once thought that it would be ludicrous to extend this ban to any price discrimination on the grounds of gender and age as well, I've begun to wonder.
Why ban discrimination on the grounds of sexual orientation but not gender? Most people have no more choice in their sexual orientation than they do their sex, yet insurers tell us it is OK to price their products on the grounds of one and not the other. As a man who drives carefully and has never had an accident, why should I should I be forced to pay higher car-insurance premiums? Equally, why do I get a discount just because I'm married? Surely that's tantamount to discrimination against those who don't believe in marriage.
You could say that this is political correctness gone mad. I'm not sure it is. Insurance companies discriminate against their clients every day – it's just that most people are oblivious to it, or have never thought of the implications.
Banning it will, of course, only raise prices for most of us, but overseas insurers have been working like this for years and still manage to make money. In the US and most European countries, they insure the car, not the driver – why not the same over here? At least men who drive well and women who drive badly will not be discriminated against.
Given that car insurance is compulsory, it must be readily available to all. Under the current system, however, some age groups and genders are priced out of the market, regardless of their attitude to road safety. So I've changed my mind – I sincerely hope that the EU comes after British insurers, and eliminates discrimination for good.
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