A new ruling from the European Court of Justice will prevent insurers from using gender when calculating premiums in insurance-related products. Last week’s decision means that from 21 December 2012, motor insurers across Europe will no longer be allowed to consider sex of the applicant as one of the factors in determining the insurance premium.

Association Belge des Consommateurs Test-Achat, a Belgian consumer group, had originally campaigned against the rule last year before the European Court took up investigations and both insurance companies and consumers are now expressing concern over the negative effects on insurance pricing in the future.

Although the majority of consumers understand that men are more likely to be involved in an accident than women and therefore pose a higher insurance risk, the insurance companies can no longer use this information in setting a premium. The result may well be that premiums for females rise to match those charged to males (rather than penalties being applied to male premiums being dropped).

Many in the industry are also concerned that the European ruling on gender discrimination will lead to further investigations, most likely preventing the use of a customer’s age as a factor to determine an insurance premium.

As the number of personal factors used in calculation of motor insurance is reduced, the vehicle factors will become more important and have a higher influence over the cost of premium – factors such as theft risk, security fitment levels and approval levels, as well as any insurance group rating schemes in place in that country.

According to WhatCar? information, the price difference in premium between each insurance group in the UK is £25 for their average customer. If the vehicle risk becomes a more important factor in the premium calculation, then this average price difference is likely to increase.

SBD are also aware that UK consumers consider the insurance group as one of the more important factors when purchasing a new vehicle. Vehicle manufacturers should therefore be aware of these latest changes to motor insurance in Europe and use this opportunity to create competitive advantage with better security, lower theft risk and reduced insurance costs.

For more information on how SBD’s strategic advice on meeting European insurance requirements and getting competitive group ratings, email security@sbd.co.uk