EU Court Bans Sex-Based Auto Insurance Rating

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OnlineAutoInsurance.com says that, although sex-based rating was just recently banned in Europe, the majority of the United States still allows for the practice.

OnlineAutoInsurance.com says that, although sex-based rating was just recently banned in Europe, the majority of the United States still allows for the practice.

The highest court in the European Union handed down a ruling -- in case C-236/09, Association belge des Consommateurs Test-Achats ASBL and others v. Conseil des ministres -- on Tuesday that will bar European insurance companies from pricing policies differently based on the sex of the prospective policyholder. The EU Court of Justice called the practice discriminatory, and all insurers in Europe must by December 2012 stop taking sex into account when assessing risk.

Because of the fact that women tend to be lower risks to insure, they have traditionally had greater access to cheaper premiums, both in Europe and in the United States. A comparison of free car insurance quotes online between drivers who have identical profiles aside from sex would show a significantly higher price for the male driver.

According to a press release from the Court of Justice, this goes against an EU directive stating that the union should “aim, in all its activities, to eliminate inequalities and to promote equality between men and women.”

Most states in the US allow insurers to take sex into account when assessing risk and setting rates. Five, however, ban the practice. They are Massachusetts, Montana, Michigan, North Carolina and Pennsylvania.

The remaining states allow the practice because of the fact that it is considered actuarially sound, with men being involved in fatal, property damage and injury crashes all more frequently than women.

According to 2008 data from the National Highway Traffic Safety Administration, about 1 in 2,800 male drivers were involved in a fatal accident that year, while the likelihood for female drivers was only about 1 in 8,300. For injury crashes, the likelihood was about 1 in 65 for men and about 1 in 82 for women. For property-damage-only crashes, the likelihood was about 1 in 25 for men and about 1 in 35 for women.

Source: http://www-nrd.nhtsa.dot.gov/Pubs/811402EE.pdf

That data, along with internal numbers from insurance providers, indicate that charging males higher rates for policies has proven statistically sound.

To learn more about this and other car insurance issues, readers can go to http://www.onlineautoinsurance.com/ where visitors will find informative resources about rating factors and ways to keep costs low.

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Benjamin Zitney
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