Motorhome Insurance - EU gender directive
The EU gender directive has outlawed discrimination on the basis of gender for a number of years but there has been an opt out which allows insurers to use gender as a rating factor for the cost of insurance premiums. A Belgian consumer group has challenged this opt out in the European Court of Justice and the judgement is due to be delivered on 1st March 2011.
The Advocate General has given an opinion that “the existing derogation for the use of sex-specific differences in insurance contracts should be declared invalid under EU law” and it is widely believed that this is a very strong indication that the judgement of the court will make the use of gender in insurance risk assessment and premium rate setting illegal. Clearly this has massive implications for insurers and in particular life and motor insurers who use gender as a major indicator in their rating systems.
If, as is expected, the use of gender in insurance premiums becomes illegal then renewals and new quotations will have to not use gender as a rating factor. There may be an interim period of up to three years before the new ruling comes fully into effect.
How will it affect insurance for motorhomes and campervans? Well to be frank very little. Gender is not widely used as a major rating factor for motorhome insurance. Many specialist schemes have a small discount for “female insured only” but they also have a discount for “male insured only”. It is likely that these discounts will either be removed altogether or there will be a discount for “single named driver” and another for “insured and spouse or civil partner” because these are indicators of lower risk. The net result is that female drivers may pay very slightly more, perhaps an extra £20 and the premiums for everyone else will be roughly the same or slightly lower than they would have been without this change in the law. Premiums for all motor insurance, including for motorhomes, have been on the increase recently due to a massive increase in the cost of claims, in particular personal injury claims, and it is likely that the overall additional effect on rising premiums for motorhome owners will be minimal.
Philip Holden, Managing Director of Caravanwise, a leading motorhome insurance intermediary commented “We honestly don’t expect it to make much difference for our clients. The age of your vehicle, engine size, your own age and driving experience coupled with the postcode where you live have a far greater effect on the price you pay than gender. We will have to see what our underwriting insurer decides but we estimate that less than 5% of our client list is female driver only and that there is the possibility that on average these clients may have to pay (for an typical premium) an additional £15, to bring them in line with our clients where a male is the main driver of the motorhome. We will continue to re-quote every client through our rating engine and offer a renewal premium that is accurate in the circumstances that apply at that time.”
We will know the decision of the EU court on March 1st and if, as expected, they decide in favour of removing the opt out for insurers then it may have major implications for many motor insurance buyers but it seems that it will have very little effect on motorhome owners.