Outrage is growing in the European car insurance market due to the effect discrimination is having on young drivers. Fresh evidence has emerged to suggest that prices can vary by as much as $11,200 depending on the age of the driver in the UK.

The Evidence

Research retrieved by the UK based MoneySupermarket.com car insurance website, suggests that male motorists are the most discriminated against. An 18 year old male driver with a 1.2 litre Ford Fiesta could face a bill of up to $11,737 for insurance. This is compared with a middle aged 50 year old motorist with the same vehicle who would only have to pay $576.95 on the same vehicle, a price difference of over $11,000:

Age Male

18 $11,737.33

19 $5,354.26

20 $3,365.00

30 $967.69

40 $703.47

50 $576.95

60 $516.41

70 $550.65

Another interesting statistic from this is the rise in prices for 70 year old motorists; once again it is possible that this is related to age discrimination with older motorists being statistically more likely to crash.

Statistics recovered for female drivers also support these findings; however young females are slightly less discriminated against with the average 18 year old female motorist paying $6,719.62 for insurance on the 1.2 litre Ford Fiesta. Conversely, a 50 year old motorist with the same vehicle would only pay $581.43, a price variation of almost $6,200. The same price rise for 70 year old motorists is also in evidence here:

Age Female

18 $6,719.62

19 $4,152.17

20 $2,606.98

30 $803.52

40 $666.57

50 $581.43

60 $554.82

70 $604.42

Demonstrating Discrimination

Insurance firms operate by calculating the statistical likelihood of a customer having an accident and making a claim. In terms of statistics, people aged between 17 and 21 are far more likely to have an accident than people in any other age group. This explains the before mentioned inflated prices for younger motorists.

Older motorists are also statistically more likely to have an accident than middle aged motorists, which also explains the price increases faced by drivers in the over 70s age bracket. Gordon Lishman of Age Concern corroborated this: “The insurance industry is riddled with age related practices causing significant harm to older people.”

Paul Cann, from the organisation Help the Aged, argued that age should not be such a significant factor when calculating insurance premiums. He stated: “Age alone should not be the basis for an insurance premium or quote. Insurers are entitled to make commercial decisions, but these should be based on evidence of risk and not the date on a birth certificate.”

However, it has been argued by the ABI (Association of British Insurers) that creating an international law which banned age discrimination in insurance would push up prices for other motorists, with the money insurers lost being passed onto the insurance premiums of other motorists. ABI director, Nick Starling, commented: “Insurers only use age where it is relevant, and restricting their ability to do so would rebound on all customers, through higher premiums.”

Gender Inequality

Also in evidence from the statistics recovered is the effect of gender on insurance premiums, with 18 year old males paying $5,000 more for the same policy than their female equivalents. Admiral insurance group admitted that using gender as a factor in calculating insurance premiums is common practice in the industry: “Gender is one of the factors that have an influence on the premium we offer. The difference is correctly based on our estimates of the level of risk the two customers would represent to us as an insurer”.

Debate over the morality of this recently reached the European Court of Justice, which ruled that from December 2012 it will be illegal to discriminate on the grounds of gender. This is expected to result in price increases of 50% for female motorists and decreases of 25% for male motorists in European countries.

It is likely that the effects of this will reach the USA, with most American insurers having representative brands in European markets. Legislators in the USA will also be under pressure to conform with their European counterparts forward looking policies.

Whether a future ruling will be made to eradicate age based discrimination remains to be seen.