Tuesday, March 01, 2011
Is it just a puncture, or have the Wheels come right off for Sheila?
I am very surprised to hear that it has been ruled unlawful to distinguish between the genders in the matter of car insurance.
There is a real science to the work of an actuarial, there are professional examinations indeed because this is a complicated business.
Insurance companies have share holders and members who pay into a nice big pot and that pot then pays out when it has to, when there is an accident, and it hopes to make a profit for said share holders and to enable it to remain competitive and not have to put its premiums up so much that nobody will pay the rates. And to ensure that the risk is properly assessed for each policy, it has to work out the likelihood of an accident, theft, fire etc for each person. It does this using actuarial tables. (You can skip over all over of this if you already know it).
And the statistics show that young, new drivers are more likely to have accidents than older, more experienced ones. They show that men are more likely to have accidents than women, and younger men are more likely to have accidents than not (I think that is more or less right, I may have exaggerated and the tipping point may not be 50%).
I am also unable to check, without a subscription, whether the OED officially defines the term "boy racer" but I would very much expect that it does. The actuarial tables also show the differences between urban and rural dwellers, city and town dwellers and which cities are more likely to make claims than others.
All of this we have previously held as self evident. It is why when I moved from a village in the Pennines to Liverpool Wavertree, my car insurers refused to let me take my policy with me and I had to find a new supplier.
Women have benefitted from lower premiums not because they are women per se, but because the statistics over the last umpteen years have shown that women claim less, that women need to call upon their insurance policies less, that the risk of insuring a women to drive is less than that of insuring a man.
To insist on parity for the sexes is to ignore this difference in risk. This is quite simply ridiculous. It puts our insurance companies in an invidious position, how are they to manage their actuarial business in future if they cannot draw upon the characteristics that determine that risk?
And, as with the title of the blog, I do worry about the future of firms like Sheila's Wheels who have set out their stall based on their ability to insure women drivers, rather than men, and offer a risk based lowering of premium.
I would be staggered if insurance companies took this decision lying down and did not appeal it. I see a very strong appeal coming to the European Court which will be illustrated by screeds of actuarial tables and statistics and which will demonstrate that if the concept of insurance is to hold any meaning or continue to be the manner in which we all individually protect ourselves from risk, then it has to be allowed to indicate which groups or characteristics are more or less likely to incur a claim.
Insurance will (as with pensions which I am given to understand will be next under the microscope) only work if the financial institutions which gamble on the ability of our driving, or the length of our lives, can be allowed to establish the size of the risk to their enterprise.
I am certain an appeal will be granted and that ultimately it will be successful, but if it is not, then we can all expect to find it considerably more difficult to find anyone to insure us for any risk at all in future.
And it will be at that point that the European Court of Justice will realise their terrible mistake.