Here is wishing all women a very happy International Women’s Day! Apologies I am a tad bit late but I guess better late than never! I should thank my wife for reminding me of the importance of this day. Fear not if you have no clue whatsoever what this day is all about, I am going to briefly share this knowledge with you like I usually do anyway! 🙂
International Women’s Day is celebrated every year on the 8th of March and is marked to commemorate women’s achievements around the world. Additionally, this day brings into light the issues that women face globally in areas of equality and health & safety. The UN sets a theme every year to bring to our attention a specific area of concern and urges the public and governments to empower women and protect their rights. For example, the official UN theme for International Women’s Day in 2010 was ‘Equal Rights, Equal Opportunities: Progress for All’ whilst this year, the UN focused on ‘A Promise is a Promise: Time for Action to End Violence Against Women’. In other words, it provides a platform for championing women’s rights and equality.
This got me thinking about how the insurance industry is affected and equally, how the insurance, premiums, policies, etc, affect women and their rights. It is imperative to evaluate how general female population is affected by the insurance through ever changing rules and regulations. I am, therefore keen to assess whether the concept of equality is even existent in the market that we operate in?
Let’s take car insurance as an example, several questions come up – Are women better and safer drivers than men? Do they cause more or less accidents than men? What are the frequencies and severities of the accidents they make? Statistics tell us that young men are generally riskier drivers and more likely to cause accidents than women. Using this data, technically premiums should and had been higher for men in the past. However, the new EU equality ruling aimed at promoting gender equality requires all insurance companies in the EU to put actuarial data and gender related considerations aside when calculating the premiums. This in turn has led to women paying higher premiums and men paying lower than what they were paying earlier, regardless of their overall risk profile.
Similarly, statistics suggest that women have higher life expectancy compared to men. Using this knowledge, insurance companies, for several years, have charged women far low premiums for life cover. But then again the EU ruling, demanding gender equality, has resulted in women now paying higher and men lower premiums than before. According to BBC, ‘ABI (Association of British Insurers) estimated that men could see a 10% fall in costs, while women’s rates could rise by as much as 20%.’
Additionally, a standard health care insurance policy will normally not include a maternity cover. A woman purchasing the policy however will need protection against any claims arising due to gynaecological reasons. Adding this cover consequently increases the premium, which is normally paid by women, only because they’re women, whilst men still pay the standard lower premium. In fact, in the US, many insurance companies refuse to offer maternity coverage altogether as part of the health cover. Additionally, women are charged much higher premium than men despite the identical health conditions and despite the exclusion of maternity cover.
Whether the above changes represent equality between men and women is still in question. Perhaps you are the right person to judge whether increasing car insurance premiums suggest discrimination against women or not. Whether to calculate the premiums on the basis of risk i.e. do what the underwriters should be doing, or ignore all of that and simply use the basis of gender equality? Does that mean that the insurance companies should forget about factors such as likelihood of road accidents and life expectancy when gender comes into question? Of course, there are other factors that could be taken into account such as type and value of car, experience, age, loss history, etc for car insurance and pre-existing conditions for life but are they really sufficient and more importantly, fair?
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[Image source: iranian.com/posts/view/post/10120]