Simon Read: Outlawing of gender-based pricing is upon us

 

The long-anticipated Gender Equality Day arrives next Friday, 21 December. It's when an EU ruling comes into law that forces the UK's insurance and pension companies to stop charging men and women different prices on the basis of their gender.

Financial firms have been warning for months that it will lead to a rise in the cost of insurance for millions. Is that true? And if so, when will you notice it?

There are three main areas affected: car insurance, life insurance and annuities. With car insurance, the Treasury has estimated that prices for young, female drivers could rocket 24 per cent.

That's because up until now women have been offered cheaper car cover as years of insurance claims' evidence shows they tend to be safer drivers than men.

Despite that, they must be charged the same price as men in the future so, sadly, premiums will rise. Will men's costs fall accordingly? Not likely.

However, insurers have been offering keener prices in the last year which has been reflected in an average 10 per cent fall in car-insurance costs.

So the actual increase that women drivers experience may be much less than feared. In fact the changes may not affect many as by the time it comes to renew their cover, insurers may have started pushing down prices.

They will be forced to find ways to offer competitive deals, so may look closely at other factors – such as health issues – when setting prices. The more individual pricing comes in, the less some people will pay.

With life insurance it's a similar situation. Women have a longer life expectancy so get better deals on life cover, which they'll lose when the Gender Directive comes into force.

But, again, insurers may place more importance on other factors, which could help reduce the payment shock.

With annuities men are set to be the losers. Because their life expectancy is shorter, they are offered better rates. That will be scrapped from next Thursday.

But insurers tell me that they'll simply find other ways to help the right people get the right deals.

In short, it's goodbye to gender-based pricing, but hello to individual prices.

s.read@independent.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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