European Court of Justice gender directive
The European Court of Justice (ECJ)'s gender ruling came into effect on 21 December, 2012, and it is having a huge and developing impact on insurance premiums. Historically, insurers have been able to take gender into account when calculating premiums, but this is now illegal. 
The directive will have a wide-reaching impact and some groups may benefit, but a likely effect is thought to be an overall rise in insurance premiums for both men and women.
The UK Government said that it "expects the impacts of the judgment to be broadly negative - in large part falling on consumers rather than industry".*
What insurance areas will the gender directive affect?
Car insurance and other motor insurance areas are likely to see some of the biggest changes, with young drivers thought to be the most affected. Impacts are also expected on the life insurance and health insurance sectors, as well as the pension industry.
Why is the ruling so significant to car insurance, young drivers and women?
A research paper from the Association of British Insurers (ABI) suggests that the biggest impact of the gender ruling will be felt by drivers in the 17-25 age bracket.**
It's clear now that female drivers are going to bear the brunt of the EU gender ruling. The average female driver will see the best price for their car insurance rise by 25% at renewal, while male rates will be largely unchanged. Young female drivers will be hit even harder
Scott Kelly, Gocompare.com head of motor insurance
Until 21 December, 2012, insurers were able to calculate their premiums using the evidence that shows that young males are more of a liability on the road than young females.
Given that the drivers are relatively new, insurers have had few other sources of data on which to base their premium prices.
As the insurers can no longer make a gender distinction, premiums for young women drivers are expected to rise significantly.
According to Gocompare.com data, as of July 2012 quoted premiums for men's car insurance were on average £314 more expensive than women's (£1,095 against £781). In the 17-25 age bracket, the average difference on Gocompare.com quoted premiums was £1,060 (£2,394 against £1,334).
The ABI report suggests that, after 21 December, young men could benefit from the largest average decrease in premiums of up to 10%, while young women could experience the largest average increase of up to 25%.**
Initial impact on women drivers and young drivers
It is going to take a while for the full picture to emerge as a number of providers have chosen to exit certain markets temporarily
Scott Kelly
Gocompare.com's Gender Watch campaign has analysed over 10 million car insurance quotes since January 2011.
In the period 1 January, 2011, to 19 December, 2012, the overall average best price for female customers rose from £748 to £932, while male premium's were largely unchanged.
The average best price for 17- and 18-year-old females rose 32% from £1,910 at the start of November 2012 to £2,523 on 19 December.
Premiums for 17- and 18-year-old males decreased by 10% over the same period, from £3,855 to £3,460.
The number of insurers offering car quotes for 17-year-olds also dropped from an average of 35 to 32, and it is anticipated that a number of insurers could exit the young driver market temporarily until prices equalise and the market stabilises.
As of 12 December, 2012, half of the insurers on Gocompare.com's car insurance panel had begun to equalise premiums in some way.
However, the majority of the premium changes were in relation to older drivers where the gap between male and female premiums is less marked - only a handful of car insurers had done any equalisation of younger drivers' premiums.
The AA Insurance Premium Index released at the end of January 2013 showed a 42% increase in the average best premium for 17- and 18-year-old female drivers since 1 December, 2012, while premiums for 17- and 18-year-old males decreased by 17% in the same period.
What can I do to minimise possible car insurance price rises?
Regardless of gender, a telematics-based policy may be the quickest way for a sensible young driver to reduce their premium
Scott Kelly
There is the potential to save money by considering one of the fastest-growing insurance products; telematics car insurance, also known as black box car insurance.
A black box insurance policy monitors your driving and bases your premium price on that information. It is generally thought that telematics policies are beneficial for younger drivers who are struggling to find competitive car insurance premiums, but they offer potential benefits to drivers of any age.
We always recommend that you shop around for your car insurance, and you can compare quotes from over 125 car insurance brands and save £247.07*** with Gocompare.com's car insurance price comparison service.
How will the ECJ directive affect life insurance?
This cannot be definitively known and prices can go up or down, but - as with car insurance - the directive is expected to mean an increase in premiums, with price rises predicted to be greatest for women.
Why may women have to pay more for life insurance?
Historically, women have paid smaller life insurance premiums because they have a longer life expectancy. The European ruling means that this gender-related fact must now be ignored.
What will happen to the premiums on existing life insurance policies?
If your premiums are of the index-linked type or the normal guaranteed type then they should not be affected.
If you have variable premiums you may see price rises in the coming months, although this cannot be definitively known and it is possible that premiums could go down.
What can I do to minimise potential life insurance price rises?
You can compare life insurance quotes and/or speak to an adviser with the help of Gocompare.com.
How will the ECJ ruling affect health insurance?
In countries like the US women have traditionally paid more than men for private health insurance, but many UK insurers do not take gender into account when calculating premiums.
It is possible that price rises for UK men could be on the cards, but no-one can yet be certain what will happen to premiums and they could go up or down.
You can compare health insurance quotes with the help of Gocompare.com.
What other areas is the gender directive likely to impact upon?
The ECJ ruling will have a major impact on the pensions industry by affecting the cost of buying an annuity - an annual pension income, bought out of pensions savings.
As a woman's average life expectancy is greater than that of a man, a woman's annual pension income has traditionally been less than that of a man when bought from an equivalent pot of money - because the policy is expected to pay out for longer.
The ECJ decision is expected to mean that men will receive a smaller annuity income than they do now and that their benefits will be brought into line with those of women.
What can I do to minimise the impact of possible annuity changes?
The size of your annuity will be directly related to the size of your pension pot. Why not let Gocompare.com help you try to save with our range of money products?
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By Sean Davies
