When discrimination is desirable

The European Court of Justice has decided insurers may not discriminate between male and female drivers in their pricing. Ergo, men must not be penalised for the higher risk they pose. The ruling will also affect the cost of annuities; the difference in male/female life expectancy must have no bearing on the assessment.

It is an absurd judgement which implies equal treatment is a desirable outcome regardless of the context. It is only desirable where other factors are equal, and this patently isn’t always true. Men and women are created equal, but they are not the same. In general, women may be more vulnerable in certain circumstances, but for testosterone-based reasons, men represent a higher risk.

Insurers should be able to take account of this. Their discrimination is not emotional or philosophical, but evidence-based.

Discrimination has become a pejorative term. It shouldn’t be. It is normal, essential and often desirable. Everyday we discriminate. We discriminate when we decide what to have for lunch or who to spend time with. Some of us discriminate when we decide what to wear. Others, sadly, do not.

When companies choose their employees they discriminate in order to select the most suitable candidates. They should not choose a woman over a man with the same skills and experience unless the gender of the individual is essential to the role, for example where an actress is required.

Likewise, insurance companies should not arbitrarily price the premiums of their male and female customers differently. They do so to reflect market realities, but it is also fairer.

It is fairer, because insurers shouldn’t reap normal profit from male drivers and supernormal profit from females. Equal pricing, in effect, extorts women.

Market realities demand insurers compete with each other for business. Their products are priced differentially to reflect the variable risk and to attract as much business as possible across their range of products. Men cost more to insure, especially if they’re boy racers fresh out of nappies. Obviously drivers with speeding convictions also pose a higher risk. Insurers need to reflect the cost to end-users or find their market distorted.

Expect some peculiar outcomes as a result of the ECJ judgement. Rather than provide insurance to certain categories of people at a loss, companies will find clever ways to reduce their risk exposure.

They will target female customers in preference to males, advertising in Cosmo or Mumsnet. Sheila’s Wheels may have to accept more male customers, but its current customer base is ideal for what lies ahead.

Some young men are currently quoted £4,000 for a year’s insurance. I could travel around London zones 1-6 for two years at that price. It’s unaffordable for most people, but it’s set so high to enable profit, not to manage demand. Insurers want more customers, not fewer, so they will find subtle (and not-so-subtle) ways to offer value to low-risk drivers.

Expect insurers to discriminate against anyone who fits a male stereotype. Drivers with modified sports cars who listen to gangsta rap music and work as bricklayers will find insurance expensive regardless of their gender. People named after flowers may find insurance cheaper.

Expect ever more bizarre questions in the insurance questionnaires of the future.

Update: Archbishop Cranmer has blogged on this. Sadly he offers even more insight than I. In particular he notes the impact on annuities is likely to be even more severe than that on driving premiums. And, in light of the different life expectancies of men and women, he wonders “is the ECJ/ECHR going to ensure that the Almighty addresses this appalling anomaly by issuing a divine-right directive that the age-span enjoyed by men and women must henceforth be equal?”


God’s Own Car limps on!

Despite his age (16) and his body of work (161,951 statute miles), God’s Own Car is bearing up well.

God's Own Car

We took him on a roadtrip over Easter (that’s what cars do, isn’t it?) to see a friend in Derby, and then our nephew Dean (and his mum and dad) in Banbury. A little over 300 miles in two days. Ok, in the past, I have been known to cover that distance in about five hours so maybe it’s not that impressive.

But God’s Own Car is getting old (car years are like dog years), and with his modest 1.4l petrol engine, the number of miles he had travelled when I bought him for £570 in 2003 (about 130,000) was already impressive. So maybe I ought to be concerned for his welfare. Of course, in a general sense, I am. But I wasn’t worried that he would refuse to take us to Derby, Banbury and back. And he coped with that admirably.

Dean Waddell, David's nephew

Dean Waddell, David's nephew

No, the most nerve-wracking journey I ever undertake in God’s Own Car is the third of a mile trek to Bedevinos MoT testing centre. I always wonder, is this the end? Somehow it never is.

Yesterday morning, he failed. One of the lights was out of alignment. £10 put that right, so I now have a fresh new pass certificate. Whoopie!

But there are £160 of advisory notices including slight corrosion in two places, two slight issues with the front suspension and an oil leak. There is also an issue with the offside front headlamp which – apparently – is “not in good working order, but light output not severely reduced”. This particular advisory has featured on my MoT certificate for the past four years, but when I query how much this might cost to resolve my question is dismissed with an incomprehensible mutter. More hassle than it’s worth, I suspect.

£160 seems a reasonable investment for God’s Own Car. A new Astra would depreciate this much in a matter of weeks, even assuming it had already experienced the initial driven-out-of-the-showroom hit in value. But I wonder how much would be too much to spend on repairs for such an old car?

The insurance for the year ahead will be £322.50. I always aim to check I will actually require insurance before going ahead with the quotations. And then my existing insurer gets the honour of the first call. They quoted £337.50, but said they might be able to offer a better price depending on rival quotes. I retort that if there’s a better price on offer, let’s hear it. Let’s hear their ‘best price’, then there will be no need for me to trouble them later on! So they knocked £15 off. As it was, their nearest competitor was well over £400, so I am still with Elephant, who I recommend.

It is a pleasure to be the custodian for God’s Own Car. But I wonder for how much longer? And will I forever resist that latent urge for a motorcycle?