Follow us:

EU gender price ban to raise womens insurance costs

By Kayser Baird | Durban | December 22, 2012
New European rules have come into force banning insurers from charging different rates based on gender

(Kayser Baird) It is generally accepted that women have lower car insurance premiums because statistically they have less accidents than men.

In March 2011 a European Court of Justice ruled that it was sexual discrimination to charge people different premiums on the basis of gender alone.

The insurance industry was given time to prepare for the change but the changes have now come into effect and women will see their premiums go up by up to 40%, while men could see their premiums coming down by an estimated 10%.

Could the same thing happen to the South African insurance industry?

Insurance companies here do use gender as a factor in their pricing and while the EU ruling is not binding on South Africa, foreign judgements carry authority and influence the decisions of our courts and it is quite likely that the setting of insurance prices based on gender will be challenged in South African law courts at some point.

This could spell the end of cheaper insurance for women, and present serious challenges to insurance providers who have positioned their brand to target this market segment.

Insurance brands targeting women in South Africa have run long-term advertising campaigns which have helped to create awareness in South Africa that women qualify for cheaper insurance rates. If South Africa follows the EU move insurance providers targeting women drivers would find themselves scrambling to adjust their model to make their brands viable.

The reality is that whatever rates exist for women, they exist at the underwriter level and are therefore available through any insurance channel. So whether or not insurance brands targeting women can survive the removal of their already not-so-unique primary differentiator remains to be seen.

Sheilas’ Wheels which is a UK brand similiar to First For Women recently had a scrap with local law firm Sackers forcing the law firm to retract comments suggesting that new EU gender rules will consign it to the scrapheap.

Share this: