Gender Discrimination in Insurance – Does It Affect You?

On both sides of the Atlantic, gender discrimination in insurance is something of a discussion point. Insurance policies and rates are determined by actuaries, who look at a wide variety of variables to work out what you should be paying, like where you live and what you do, and quite often gender is one of those variables. Some historical data shows that women live longer than men for example, and insurers use these kinds of statistics to give lower or higher premiums to people depending on their gender.

However in Europe, the EU recently declared this illegal. For years, car insurers have studied statistics and concluded that female drivers are less likely than males to get in accidents or make claims, and so have offered lower premiums for women. Ads have targeted women by describing them as “careful drivers” and there are even insurance companies who only offer policies to female drivers. Whether this is based on hard evidence or the stats have been exaggerated for marketing purposes is debatable, but one thing is for sure: as of 21st December car insurance providers can no longer offer reduced rates to women, and the advertising campaigns targeting them will stop.

It is anticipated that women drivers’ insurance premiums will rise to meet men’s, in some cases going up by around £300, or between 25 and 50%. This will obviously require women to plan ahead and budget for the increase. Women are also advised to make sure they hunt around when next renewing their policy – the variables used to determine your insurance premiums will have changed. So use price comparison sites and do your own legwork to make sure you’re getting the best deal.

While in Europe women have been saving on car insurance in comparison to male counterparts, women in America are having the opposite problems when it comes to their health insurance, due to gender ratings which favour men.

A report published this year by the non-profit National Women’s Law Center claimed that gender rating results in women being charged significantly more than men for the same policies (even when maternity care is taken into account). In some cases they found that policies for women cost around 85% more than comparable policies for men. For example, one plan in South Dakota charges a 40-year-old woman $1252.80 more a year than a 40-year-old man for the same coverage.

Many states have banned gender rating already, but a widespread ban won’t come into force until 2014. In the meantime if your state has not banned gender rating unfortunately there is little you can do other than compare plans and find the best for you. If your state has banned gender rating but you believe you are still paying more than a male counterpart for an identical plan, you need to complain.

This post was written by Kat. She is a regular blogger on a variety of personal finance subjects such as insurance, loans and budgeting.