Home Industry News GDV : insurence premiums to rise with new law

GDV : insurence premiums to rise with new law

0 0

The price of car insurance is expected to rise by 11 per cent for some drivers, when a ruling by the European Court of Justice is implemented next year.

The ruling states that gender is no longer allowed to be a factor for insurers when calculating the price of premium. The law is expected to raise the price of insurance for demographics who are today considered ‘low risk’ drivers, such as young women, and lower the price for those considered ‘high risk’ drivers, such as young men.

A report by German insurance association GDV, estimates young women will see the biggest price jump of around 11 per cent. This would add around GBP400 per year to their average policy.

The study also revealed that high risk drivers, namely young men, will receive cheaper policies as a result of the ruling.

The law will apply to any risk assessment, so price changes are expected in other areas as well.

The study predicts that men will see a reduction of pension income of 4 per cent, and women will see life insurance premiums rise by at least 30 per cent.

Michaela Koller, the director general of the European Insurance and Resinsurance Federation, said: “The ban on gender in insurance pricing may have a number of potential unintended negative consequences for consumers, insurance markets and society more generally.

The use of evidence-based statistics is indispensable in actuarial science, and the study proves that gender is one of the factors that has an obvious impact on the risks to be covered in such products as annuities, term-life and motor insurance.

The European insurance industry will, of course, abide by the ruling of the court but the implications of that ruling for consumers and insurers need to be understood.”

The law will take effect from December 21, 2012.