CHESTER, England, January 14, 2013
Young female drivers are feeling the impact of the European Court of Justice
(ECJ) ruling on the use of gender to price car insurance, according to analysis of 1.3 million quotes through
MoneySupermarket*, while young male drivers are seeing the benefit as prices have fallen.
The analysis of the cost of car insurance shows that since the ECJ ruling came into effect on 21 December 2012, young female drivers in the 17-19 age group have experienced inflation of 22.1 per cent on their car insurance premiums - or a hike of £231 on average.
However, male drivers in the same age group have seen an 11.2 per cent fall in premiums, or £184 on average - but still typically pay more than females of the same age.
Despite predictions of 'Carmageddon' by some prior to the ruling being enforced, the reality is, overall car insurance premiums have actually decreased - 4.9 per cent overall, or £24 on average. Further analysis shows that typical premium prices for women of other ages have not increased since December 21st 2012.
Car insurance premiums December 3rd 2012 - January 13th 2013 for young drivers
The overall premium for 17-19 year old drivers is currently £1,403 through
MoneySupermarket; an increase of 6.8 per cent or, £89 on average.
Overall cost of car insurance December 3rd 2012 - January 13th 2013
Analysis of car insurance prices for all motorists quoting through MoneySupermarket shows premiums are continuing to fall despite the implementation of the new rules and other factors such as the recent issue around the costs of reinsurance.
Female drivers overall are now paying 1.9 per cent less for car insurance than at the beginning of December, with average premiums now £416. Male premiums are also falling with the average overall premiums of £490, a decrease of 7.2 per cent since December 2012.
Peter Harrison, insurance expert at MoneySupermarket said: "The introduction of the gender rules was always going to cause concern as the impact on premiums, in particular, female premiums was always an unknown. However, the UK car insurance market is one of the most sophisticated in the world, with insurers using other factors other than gender to calculate premiums. In addition, it appears that the competitive nature of insurance is helping keep premiums down.
"Although it is early days since the ruling came into force, the average overall premiums for motorists have continued to fall, just as it did in 2012. Car insurance is now 7.6 per cent cheaper than this time last year. However, young female motorists are currently experiencing the impact of the ECJ ruling, while young male driver are seeing a benefit, but it is important to note that young male drivers still pay more for car insurance than any other group.
"For those drivers who have seen an increase in premiums from their provider, it is important not to accept the renewal quote from your existing insurer. Instead shops around and compare premiums. Prices do vary by the day so be savvy and snap up a deal that you are happy with."
BROKERS have put the rising
cost of insurance down to increasing concerns by reinsurers over the way in which people are being compensated for accidents.
Reinsurers offer "insurance for insurers", by taking on the risks of the insurance firm which has a direct contract with the customer.
Broker Willis Re said UK motor insurers which had big enough losses to trigger reinsurance payouts saw rate increases of 35% and upwards on policies which took effect from January. Those which did not rely on reinsurance payments faced rises of 20%-30%.
The Financial Times reported that the knock-on effect for UK policyholders could be a 3%-10% premium rise, according to some estimates, which would mean hundreds of pounds extra for some drivers.
Willis Re said that larger, more serious bodily injury claims are increasingly being settled by periodic payment orders (PPOs), which are paid at regular intervals over the lifetime of someone who has been injured, rather than a one-off sum.
Grange Turner, executive director of Willis Re, said this has created greater uncertainty for insurers and reinsurers, which need to weigh up factors such as the life expectancy of a claimant and wage inflation.
He said: "Many reinsurers have become increasingly concerned about taking all of these variables on to their own balance sheets."
The added cost pressures come at a time when young female drivers in particular are already predicted to see their car insurance premiums shoot up, after European rules came into force last month banning insurers from taking someone's gender into account when calculating how much their insurance should cost.
Young women are forecast to be among the worst affected due to the comparatively high accident rates of young men.
Peter Harrison, car insurance spokesman for comparison website MoneySupermarket, said: "Any additional cost won't go down well and I'm sure that cost will be passed on."
Mr Harrison said the competitive nature of the market kept premiums on a downward slide over the last year.
But he said that any price adjustments as a result of the new gender rules are likely to become clearer in the next few weeks.
"We will see a lot of volatility in the next few weeks," he said. "This has been a very big change in the way that people do things."
Top tips for getting a cheaper car insurance quote:
Fit an alarm: Fit an approved alarm and immobiliser, such as a Thatcham 1 or Thatcham 2. All improvements to security should help to lower your car insurance costs.
Use a 'black box' - many insurers now offer 'black box' technology which monitors your driving habits and rewards good drivers through lower premiums.
Check your mileage: Make sure you are not paying extra for miles you are not covering in your car. Try and work out how many miles you will genuinely cover - but don't get it wrong as inaccuracy could jeopardise your claim.
Minimise your optional extras: Only select to have a courtesy car or legal expenses if you really need them, as they may increase your premium.
Be careful where you park: Keep your car parked in a locked garage overnight if you can - this can help reduce the premium. More than 50% of vehicle thefts occur during the night so if your car is safely locked away it makes sense that your insurance costs will be reduced as a consequence.
Add a partner or parent to your policy: Adding a partner or a parent to your policy details may reduce the cost of your premiums, a particular benefit to younger drivers. However, don't add a parent as the main driver if you are the main driver of the car as this will invalidate your insurance.
Opt for smaller engine sized car: Insurers calculate premiums based on a number of factors, but the type of car you drive, and the engine size of the car will impact premium prices. Opting for a smaller car with a small engine will give cheaper premiums.
The European Court of Justice (ECJ) ruling on gender will take effect at the end of 2012, which means that women will have to pay out more for their car insurance premiums in the name of gender equality. Even so, female drivers could be seen to be in a better position than male drivers due to the specialist insurance add-ons that are available to women. But are these extras really worth it, or will a bog standard car insurance policy be enough?
Some specialist insurers offer handbag cover as an add-on to your policy. A typical handbag will contain a smartphone, cash and credit cards, a digital camera and maybe even an eReader or smart tablet. All this can add up to about £1000, so having your handbag stolen could put you seriously out of pocket. Most handbag cover policies cover the contents of your handbag up to about £300, and you have to pay between £50 and £75 in excess. So if the contents of your handbag were stolen or damaged in an accident in your car, the most you’d be able to claim back is £250 out of a potential £1000 worth of gadgets. In some cases, the handbag alone is worth the same amount of the payout. As well as this, most insurers don’t cover for cash, credit cards, stamps and tickets under this policy.
Another feature of specialist women’s car insurance is the addition of child seat cover. Since all children under the age of twelve have to be in a car seat, it’s become more important to make sure that these are fully protected in the event of an accident. The amount offered in these policies varies from about £100 to about £300 to put towards a replacement child seat. When you factor in your excess as well, the amount you receive may not be worth the extra that you pay on your premium. An increasing number of car insurers are aware of this and offer varying levels of cover, so you can compare car insurance providers and find which version of cover best suits your needs.
It could be that you’re looking to get these add-ons for your car insurance policy when you already have cover in place elsewhere. Look to see if your home insurance policy has the option of protecting your personal belongings outside of your home, or how much extra it would cost you to have that add-on. Similarly, you may already have mobile phone insurance or extended cover on your smart tablet, so there’s no need to take out extra cover with your car insurance. Make sure you read the fine print on these other policies to make sure that they’d be covered if something were to happen while they’re in your handbag.
So are these specialist lady driver tailored policies worth it? Well, it depends. If you don’t have a lot of expensive items in your handbag, or if you’ve got separate cover in place for the more costly gadgets, then handbag cover could be beneficial for you. As with child seats, however, you may find that the potential payout in the event of an accident or theft isn’t worth the increase in premiums, so it pays to weigh up your options.
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