Opportunity for insurers to raise prices, says Fitch
The European Court of Justice ruling preventing insurers from calculating insurance based on gender could prove a positive result for the motor insurance industry, claims ratings agency Fitch.
It said for the motor insurance industry as a whole, the ruling "could be seen as good news, as it will provide insurers with the opportunity to raise prices in a difficult market".
The UK motor insurance market has suffered from massive losses in recent years due to rising bodily injury claims and fraud.
Fitch also noted that female drivers with little or no driving experience are likely to be the most heavily penalised by the rule changes.
“The 17-29 year age bracket is again likely to see the greatest rate increase, as was the case in 2010 when UK motor insurers increased rates by 30%-45% for this bracket in an effort to restore profitability,” says Martyn Street, director in Fitch’s insurance team."
However he expects the UK motor market to remain highly competitive. “More sophisticated insurers are likely to use the gender ruling as an opportunity to refine their pricing models,” said Street.
“Rather than applying a blanket increase to premiums, insurers may try to re-price their policies away from gender-specific factors. This could include a greater emphasis on other indicators of risk, such as previous driving history, occupation and postcode.”
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