Changes to EU Gender Directive due this week

As of this Friday (21st December 2012), it will be illegal for insurers to offer different premiums to men and women based on their gender alone.

Insurance companies have slowly been phasing their price changes in recent weeks, with new pricing required to be in place from the 21st of the month.

As a result, prices for women will rise, while men’s premiums will drop. The changes will be most pronounced for young drivers – female drivers under 25 could see a 25% hike according to the British Insurance Brokers Association. Men could see a more modest fall in cost of around 10%.

The change is designed to make things fairer for the customer, however women have gotten used to cheaper premiums over the years – and the change in the law could price some young female drivers off the road.

The BBC has a great video summing up the change and its impact – you can watch it here.

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Young driver reforms proposed by ABI this week

The Association of British Insurers (ABI) released a report yesterday entitled “A safer start for young drivers” in which it calls for an overhaul in how young people learn to drive.

The main proposals put forward are as follows:

  • Learners to be prevented from relying on an intensive driving course to pass their test
  • The introduction of a new “graduated” licence for the first six months after passing a test. During this period young drivers would be banned from:
    • Carrying more then a certain number of passengers -
    • Driving between 11pm and 4am, unless driving to and from work/college
    • Having any amount of blood alcohol detected – a zero tolerance approach to drink driving
  • The age at which young drivers can start learning to drive would be lowered from 17 to 16 and a half.

The proposals seek to reduce crashes by banning young drivers from statistically dangerous situations.

Similar schemes have been adopted in the US, Canada and New Zealand, with reported success. Powerful statistics backed up some claims, including the fact that fatality risk quadrouples when you have three passengers compared to driving on your own.

What do you think of this approach? It’s a nice thought that young drivers could manage their own driving given the proper education, though will it in fact take a stronger approach from the government to change habits? Let us know what you think!

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Car insurance market in ‘turmoil’ according to AA chief

Some car insurance companies are slashing prices in a land grab for new customers, whilst others are having to raise prices to compensate for losses, according to AA Director of Insurance Simon Douglas.

“Competitive pressure is leading some companies to make big premium cuts on price comparison sites so that they can increase their portfolio of customers. While this is great news for consumers, they need to make sure they’re getting good cover, not just a good price,” commented Douglas.

Mr Douglas added that “significant inroads” are being made to tackle fraudulent claims such as “crash for cash”, although insurers are still handling “excessive” numbers of whiplash claims, which push up premiums.

Have you had a renewal recently? We’d be interested to hear what kind of experience you had. You can let us know in the comments.

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Competition Commission study lined up for car insurance industry

The car insurance market has been labelled ”dysfunctional” by the Office of Fair Trading this week.

An estimated £225m is added to UK motorists’ insurance premiums by inflated replacement car hire and repair costs, it said.

With no quick fix available, a more comprehensive study has been commissioned into the cause of high premiums.

John Fingleton, chief executive of the OFT, said ”Competition in this market does not appear to work well for drivers.”

Nick Starling from the ABI agreed, suggesting that drivers were carrying the burden of higher prices. ”For too long insurers and people paying premiums have faced inflated rates for credit hire cars and excessive hire periods, which have led to higher premiums,” he said.

It’s difficult to talk about rising the cost of car insurance without mentioning referral fees – it is suggested that collusion between insurers and replacement vehicle providers means that an average of £560 extra is charged to the at-fault party in an accident.

We hope to see findings that help bring changes and apply downward pressure to car insurance prices for consumers across the UK. In the mean time, check out the insightful video and interesting comment thread over at the BBC.

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Black box insurance recommended for young drivers by Transport Secretary Justine Greening

Everyone knows that car insurance is expensive if you’re young. The problem has only been growing in recent years, but the emergence of ‘black box’ insurance policies in the past 6-18 months has offered a glimmer of hope.

Transport Secretary Justine Greening has drawn attention to these telematics-based insurers this week, suggesting the technology will be a major tool in getting motor insurance costs under control.

“There is no getting away from it: the cost of car insurance is bearing increasingly little relationship to the real world.’ The average motor insurance bill today is £410 – a 17 per cent rise on last year. The average premiums for young drivers are £2,977 for a young male driver and £1,682 for a female,” said Justine Greening.

Greening was not convinced by the idea of using curfews, but instead focused on the ability of black box insurance policies to improve driving behaviour among our young road users.

The best start you can make as a young driver is ensuring you’ve chosen the right car. You can use our Insurance Group checker to find cars in lower groups, giving you more chance of finding cover that you can afford.

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Car insurance prices remain steady

According to the latest report from The AA, car insurance prices in the UK are unchanged since January 2012.

The average cost of insurance for British drivers is £1,542. Prices rose by up to 40% from 2010-2011, but the rise has halted in recent months.

The government has taken steps to reduce the impact of ‘no win, no fee’ lawyers, banning referral fees paid by lawyers to those who pass on the details of an accident.

“The industry is still having to deal with fraud as well as increasing numbers of personal injury claims, despite the number of crashes on Britain’s roads falling,” said Simon Douglas, the AA’s Director of Insurance.

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Petrol prices set to rise following 2012 Budget announcement

Fuel prices will increase by 3.02p per litre from August 2012 after George Osbourne refused to freeze prices.

It’s likely to push prices to £1.45 per litre, and £1.50 for diesel engines.

The following graphic from The Daily Mail shows where the price of petrol comes from:

The make-up of fuel prices

How will the increase in prices impact your life behind the wheel? Will you be forced off the road, will it not impact you, or do you have no choice but to cough up?

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Car insurance for young women set to soar under EU ruling

The Labour Party revealed statistics from the Treasury this week, warning that female driver premiums will increase by £362 on average at the end of this year.

The rise in car insurance prices will be caused by the EU Gender Directive when it comes into force at the end of 2012. The Directive means that insurance companies are not allowed to use gender as a rating factor when calculating premiums.

Apologies for this cliche stock photo depicting men versus women!

Women do currently pay less than men, and especially the young and recently passed. This is because claims data shows they’re a lower risk than their male counterparts. However, with this data no longer allowed to be used, male and female premiums are likely to meet in the middle.

The idea of “boy racers” impacting young female driver’s premiums will now become a reality. Many are suggesting that black-box insurance products are a potentially savior for young females – their gender can’t be tied to their driving ability, but if their ability can be measured directly, gender loses its importance.

We’d be interested to hear your feedback on the Gender Directive – is it right to lump men and women together when it’s proven that women crash less often? Discuss!

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About the old 20 group insurance rating system

Here at CIG we’ve been getting a lot of questions asking about the 20-group insurance rating system and what happened to it. So in this blog post we hope to clear things up!

From 1992 until 2006, the Group Rating Panel classified new cars using a 20-group system.  At the time, using 20 groups was sufficient given the number and variety of vehicles in production at the time.

There were originally 9 groups, and just as an update was required in 1992, another was agreed in 2006.  The ever-increasing range of vehicles on sale – including city cars, 4x4s, SUV/crossovers, people carriers etc – is the reason for the latest update.

The increasing range of vehicle types available - including SUV/crossover/4x4s like this BMW - have forced the expansion of the group rating system

The result: 20 groups has now become 50, with cars available to purchase as new from 2006 have been included in the 50 grouping dataset.  Insurance companies took a couple of years to get up to speed with the new groupings, but at the time of writing this article, the 50 group is the standard industry approach for modern cars.

There’s not a direct way to translate 20-group to 50-group ratings, but as a quick calculation you can multiple the 20-group by 2.5.  So a car in group 4 on the old scale would be around group 10 on the new scale.

We recently updated our website to provide you with access to a list of cars from the new 50 group data.  Head over to our group rating directory to browse the groups and uncover cars in specific groups – particularly useful if you’re looking for a car in a low insurance group.

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Young driver drug driving problem continues

A study by charity Brake today reveals that more than 1 in 10 drivers aged 17-24 has taken to the road while under the influence of drugs.

Young drivers are also four times more likely than their older counterparts to consider drug driving.

Ellen Booth, Brake senior campaigns officer, said: “The risks of driving on drugs are huge, and the consequences devastating – yet a huge proportion of young drivers are taking this appalling gamble with their own and others’ lives.”

You might be surprised to learn that it’s not illegal to drive with drugs in your system – unless the police can prove that the drugs are impairing your ability to drive.  Brake proposes that this law should be changed, bringing it in line with the approach currently used for drink driving.

As far as we’re concerned, drivers both young and old should stay on the safe side and never drive with any substance in your system – it’s impossible to know the exact effect it will have on your hazard perception and driving ability.

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