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The effect of gender equality in car insurance

Motorists across the UK are always looking for ways to cut motoring costs and for many, especially younger drivers, insurance premiums are a substantial element of those costs. Towards the end of last year, the EU changed the rules regarding how the insurance companies assessed their risks.

Motorists across the UK are always looking for ways to cut motoring costs and for many, especially younger drivers, insurance premiums are a substantial element of those costs. Towards the end of last year, the EU changed the rules regarding how the insurance companies assessed their risks. This meant that female drivers, who are statistically safer, could no longer benefit from lower premiums than their male counterparts, based on their gender alone. Many industry observers predicted a sharp rise in female premiums while doubting that male premiums would drop by the corresponding amount. So now that we are a few months into the new regime, has this come to pass?

According to the British Insurance Brokers' Association (BIBA) the cost of car insurance for female drivers did in fact rise substantially over the first months of 2013. Initially female drivers faced steep rises of up to 40% on their premiums but competition in the market then took over and rises fell back to a more reasonable 5% to 13%. AA spokesman, Ian Crowder, explains: "Insurers are getting used to being gender-neutral now. It means as the year progresses, premiums for women will come down further. Drivers renewing at the end of the year, those who last renewed their cover just before the gender law came in, will make the greatest savings."

Now that insurance companies are prevented from taking a driver's gender into account in determining risk, they are looking at other factors. Drivers considering purchasing new cars would do well to note that more emphasis is now being placed on the type of car and even the occupation of the driver. Crowder added: "Effectively, they are having to start from scratch in the way they rate their risks."

BIBA spokesman, Graeme Trudgill explained how the risk assessment process could change how we buy cars and what role training might have: "More than ever before, smaller cars with smaller engines that are worth less will be cheaper to insure for younger drivers. They might also look at training. There are insurers who will give younger drivers a 10 per cent discount with a BTEC Level 2 driving qualification. Others will give 15 per cent off if drivers have an in-car camera to monitor their driving." Trudgill also suggested that younger drivers might be better served by finding their insurance away from the main comparison sites. He explained: "Plenty of brokers specialise in young driver cover. These can be better at matching young drivers to the market and finding competitive offers."

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