New EU rules to stop gender discrimination in insurance pricing come into force today.
From 21 December 2012 insurers can no longer take gender into account when setting premiums following the European ruling on gender in March 2011.The change will affect car insurance, annuities and life insurance, which all previously used gender as a risk factor when determining prices.
The gender directive will only apply to new policies and renewals taken out from 21 December and not policies in existence before this date.
Gender discrimination and prices
Historically, young women have been able to get cheaper car insurance than young men because they are less likely to have an accident. Men have been able to get cheaper life insurance and higher annuity rates because they have a shorter life expectancy.
These groups are all likely to see their premiums rise as a result of the new insurance rules.
As insurers have all changed their pricing systems, it’s now more important than ever to shop around for insurance and not automatically renew with your existing provider.
Annuity rates – how the gender neutral rules will affect them
Many providers have already incorporated the new gender discrimination rules into their pricing. According to information provided by Hargreaves Lansdown, annuity providers have made the following changes:
- Aviva – females gain 2% to 4%, males lose 1% to 2%
- Aegon – mainly uprated female rates towards male terms
- Canada Life – equalised rate for standard annuities falls between male and female terms
- Just Retirement – little difference due to emphasis on underwriting
- Legal & General – females gain 3.2%, males lose 3%
- LV – females gain 3% to 5%, males lose 1% to 3%
- MGM – females gain 3%, males lose 3%
- Partnership – females gain 6%, males lose 3% (enhanced annuities)
- Prudential – female rates will increase by 6.5%, males will decline by 1.5% (for 65-year-olds)
- Standard Life – females gain 1% to 2%, males lose 1% to 2%