Is it ethical to offer women cheaper car insurance premiums?

The European Union’s Court of Justice Test-Achats case (C‑236/09) of 1 March 2011 is unambiguous. It states that car insurers must change their pricing policies in order to treat individual male and female customers equally in terms of insurance premiums and benefits.

But is equality actually fair?

Before we delve into that, it’s worth noting that there’s been an unintended consequence of this ruling. Prior to the ruling, UK men paid £27 more for a year’s car insurance than women, but within five years that figure had blown out to a gulf of £101. That’s almost a fourfold increase.

The reason? Rather than just tack on a premium for men and a discount for women, insurers started to inspect claims more carefully. If you’re a bricklayer who drives a Toyota Hilux your claim would probably be weighted. Were you a midwife who drove a Honda Jazz, insurers’ algorithms would come to a very different conclusion.

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In short, by forensically inspecting many of the other risk factors involved in your submission of information, European insurers can arrive at the root cause of your risk.

If I changed the name on a UK insurance application from Andrew to Andrea, the price would stay the same, but the software would be able to figure out that I’m only a marginally safer risk than Pastor Maldonado.

But back to that question of whether women really are safer than men. Yes, of course they are. The insurance industry isn’t in the business of giving away freebies and years of data supports the argument.

Women are typically less skilled drivers than men – look at gender-split driving test pass rates in any developed country for proof of that – but that data is more than overwhelmed by that chemical C19H28O2, or testosterone to you and me.

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Aggression and overconfidence in male drivers accounts for the fact that men are much more likely to cause a death or injury while driving and are around four times more likely than women to drive under the influence of drugs or alcohol.

Men also account for 73 percent of all worldwide road traffic deaths, three times the rate of women. In the EU, more than 90 percent of convictions for deaths caused by dangerous driving are against men.

But men also drive more kilometres than women—a lot more. According to the Federal Highway Administration, men drive around 40 percent more kilometres per annum. Yet the NHTSA states that men cause 6.1 million accidents per year and women cause 4.4 million per year. Therefore on a kilometre per claim basis, men are considerably safer than women.

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That ignores the fact that when men do have accidents, speeds are usually higher, consequences more significant and costs considerably greater than the sort of accidents women typically claim for.

So the answer isn’t straightforward. Women are more likely to file an insurance claim than men given similar distances travelled, but their lifetime claim value is also likely to be less. So is charging them the same amount fair? Clearly not.

Guys, we’re going to have to swallow our pride on this one…