Why the ECJ Decision on Insurance is Bad for Everyone

So the European Court of Justice (ECJ) has ruled that offering people different rates for their insurance based on gender "constitutes discrimination."  Surely that means good news for the male half of the population?  Well, it may mean some lower premiums, and it'll probably mean higher premiums for the female half, to help compensate, but it's an awful decision.

The decision to charge men higher premiums may well be based on gender, but it's also based on underlying facts that show they are higher risk, in the same way someone with a house on a flood plain will pay higher premiums than those whose house is not.  Male drivers are more likely to have an accident (before we get into it, I don't think men are worse drivers, but on average they tend to drive more often, further, on unknown roads, which increases their chances of an accident; add the general machismo and psychology of a man behind the wheel and you have a recipe for accidents), that's why they get charged a higher premium, if that wasn't the case, men wouldn't get charged higher prices.

Insurance is an industry based on risk.  Forcing the industry to chance the way they calculate risk has massive implications.  Imagine if a bookie was told he had to offer the same odds of a man winning a 100m race against women.  They base their decision on gender, women aren't as fast, so they would give you lower (worse) odds on him winning.  Are they going to be forced not to discriminate as well?

If you're a guy and you think this'll mean lower premiums, I suspect that, largely, it won't.  The insurance industry will see it as an excuse to make more money.  The price of a policy for a man won't go down, they'll just raise the price for a woman to match it.  We all lose.

0 Comments

Post a Comment