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TIMOTHY CHAMPIONS THE RIGHTS OF WOMEN DRIVERS
Tuesday 30th March 2004
The European Parliament decided today that gender may be not used as a factor in insurance and actuarial decisions. Timothy Kirkhope MEP, Conservative Spokesman on Justice and Home Affairs in the European Parliament, has been championing the cause of young women drivers and pensioners in Brussels and tabled amendments to the Prets Report on Equal Treatment in Goods and Services. These amendments were rejected by the Parliament, including Diana Wallis, Liberal Democrat MEP for Yorkshire and the Humber. The directive means that young women drivers will no longer receive preferential rates on motor insurance and men will receive lower pension annuities than they currently do, which, in most cases, will le ad to an overall fall in the income of retirement households.
Timothy Kirkhope MEP said, "Whilst the principle of equal treatment is a laudable one, this directive goes too far. Insurance companies assess risk on sound data, indeed this has been demonstrat ed in the British courts. The Directive will harm not only young female drivers but also pensioner households; exactly those whom it is designed to protect. Liberal Democrat MEPs have shown their true colours by supporting this report."
Notes for Editors
It is a proven fact that young male drivers give rise to greater claims expenditure than young women. Because of this, gender is used as one of several factors in assessing car insurance premiums. Young women pay about 25% less for their vehicle insur ance than young men.
If gender is excluded the safer young female drivers will pay more for their vehicle insurance. Unisex prices will be closer to the higher, male level. The price of insurance will send an adverse signal on road safety.
The exclus ion of gender as a factor in underwriting and actuarial decisions will not lead to the price of premiums and annuities moving to a point half way between current prices for males and females. Instead, they will end up closer to the higher price. This is a result of 'adverse selection' actuarial factors are public knowledge, and the pool of insured attracts those with a greater chance of being paid.
At any age, life expectancy is greater for women than for men. The gap is narrowing, as male and female lifestyles converge, but the UK Government Actuary\rquote s Department estimates that a gap of about four years will remain for the foreseeable future.
Women therefore receive lower annuities than men for the same lump sum pension. For a pension of 50,000, a man of 65 would receive 3,699 a year; for the same sum a woman aged 65 would receive 3,480 a year - a difference of 6.1%. This is fair. On average, they receive the same amount, but women live longer, and the money is spread over a longer period.
If gender is excluded, annuity rates will fall towards the lower female level. Overall income in retirement households will fall, because most annuitants are men. Men will be deterred from saving for their pensions, with a negative effect on the savings gap. The best way of raising the level of female annuities is by encouraging women to save more, earlier in their career.
