Higher premiums for life and car insurance for men not unfair discrimination in SA

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) April 4, 2011 --

The right to vote and cheaper life and car insurance premiums? You can’t have it both ways women, or so says the European Court of Justice. The battle of the sexes finally ends, leaving insurance companies the victor as now men and women pay high premiums. According to the court, insurers can no longer use gender as a measure for insurance risk as it is tantamount to gender discrimination. Instead of men paying less for life and car insurance, though, women will have to pay more. Changing the face of insurance in Europe, the move will force insurers to over-charge women to make up for the new risk assessment.

This move is unlikely to be followed by South African courts, though, says Danny Joffe, Legal Director at Hollard as our constitution considers gender bias for insurance fair. “Our constitution is slightly different to the European one as ours makes unfair discrimination unlawful. I think we can argue that underwriting on empirical data is fair discrimination.”

“Statistically, men are a higher risk when it comes to life and car insurance.South African insurance companies rely on statistical data to determine risk profiles across age groups and gender for both life and car insurance,” says Insurance.co.za spokesperson.

Men a higher risk for life and car insurance
“Data collected by our statistical divisions rate and charge premiums in terms of the results of that data,” adds Joffe. “It is clear in terms of certain classes of insurance [that] females attract lower rates than males because their losses are less.” When it comes to car insurance, women historically have fewer claims, leading insurers to view them as less of a life and car insurance risk.

The profile, however, is not solely based on this demographic. “There are many factors that would go into this rating such as the type of vehicle, where the vehicle is kept overnight, the age of the regular driver. All this is read together when a premium is calculated.”

The same is true of life insurance. “Mortality tables show that females live longer than males and again, because of the data, their premiums would take that into account among other things.” It’s as much a gender issue as charging younger insureds a higher premium is an age issue.

Insurance as sexist as it is ageist

Traditionally insureds under that age of 25 are a higher risk than older insureds, which in turn pushes up their insurance premiums. “Although the increased risk is based on the insured’s age, the assessment is a result of statistical data and not an arbitrary prejudice,” says Insurance.co.za. Joffe concurs, “Although based on age, because of what the data shows it cannot be considered to be unfair discrimination which is the term of our constitution.”

Given that the gender and age discrimination of insurance is statistical fact, it cannot legally be labeled discrimination. “If a court decision prevented Insurers from using gender as measure for risk, females would pay higher motor and life premiums.”

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