Insurers will still be able to use gender as a basis of risk, following a climb down by the EU.
The EU Gender Directive, giving equal treatment to men and women in the provision of goods and services, had threatened to end the ability of insurers to give cheaper motor premiums to women.
But the amended directive will "still allow UK insurance firms to us gender as a basis of risk if objective data can justify the difference" said the Department of Trade and Industry.
The ABI said the change was a "sensible decision" that it had been campaigning for some time.
Biba chief executive Eric Galbraith said he was "absolutely delighted" with the change. "If there hadn't been an exemption we would have had to re-think the whole of the insurance industry."