Do car insurers discriminate?I read a news story recently that made me think. It was about a Swedish transsexual who bought herself an Audi A6 just before undergoing gender reassignment surgery. When she came to insure the vehicle, the woman's female identity papers had not been issued. Accordingly, the car was registered under her prior identity - a mature male with no claims history - at a cheap rate. Later, after her new papers had arrived, the Swede began ringing round to inform various businesses and organisations that she'd changed gender. All went smoothly until she called her car insurance company and was informed that, as a woman, her premium would go up by 1,200 kronor. "I think it's disgusting. It's clearly discrimination. There's no logic to it," she said. To begin with, it seemed to me that she'd got what she deserved from her car insurance firm. She wanted a new life as a woman, so they issued her with a woman's car insurance policy and wiped her old no-claims bonus. Sure, the premium went up - but you could argue that the insurer was only trying to respect the woman's new identity. To all intents and purposes, I felt, they were taking the gender reassignment more seriously than she herself was. However, the words of the Swedish transsexual also set me thinking about car insurance in a much broader sense. It was the way she accused her insurer of 'discrimination' that interested me. As the employee of a car insurance firm myself, I am aware that personal details like your age and gender are taken into account when calculating the risk of your having a car accident. The vast majority of car insurance premiums are based on the results of this kind of calculation. In terms of gender, for example, women in the UK generally get cheaper car insurance than men. That's because study after study has shown that the majority of accidents and motoring offences committed in this country involve male drivers. On the face of it, the insurer's approach to calculating risk seems perfectly reasonable. However, apply the same method to an interview situation, for instance, and you will instantly be accused of discrimination. In fact, any time you judge somebody according to your experience of others like them rather than based purely on their own merits, you are technically discriminating against that person. Arranging people into groups and then letting your experience of said groups affect the way you treat them as individuals is therefore a clearly discriminatory practice. Effectively, it's also the method behind every car insurance premium we sell. But how could we do otherwise? Short of personally interviewing everyone who wants a motor insurance quote or charging the same price for every premium - both wildly impractical solutions - we have to trust the statistics and the categories or else we'd have practically nothing to go on. Perhaps another solution lies in your history. Judging a driver based solely on the number of accidents they've had, offences they've committed and claims they've made can't be considered discriminatory, because these details at least are specific to the individual. Of course, calculating risk for a new driver under such a system still remains absolute guesswork. For an example of just such an impractical solution in action, try the Canadian province of Newfoundland. As of August 2005, Newfoundland car insurance firms have been obliged to ignore age, gender or marital status when calculating premiums, and forbidden from raising rates in other areas to compensate for the shortfall. The move is said to have cut 20 percent off the price of the average car insurance policy, and, as the 2005 legislation also requires insurers to justify any increase to the province's Public Utilities Board, it looks set to stay that way for some time.
|
