Legalised profit increase for insurers!

Insurers must be jumping for joy. Legalised profit increase!

I don’t pretend to know how premiums are calculated (all information welcome) but it was always my understanding that insurers claim they use statistics. In other words a young male is more likely (statistically) to have an accident than a young female of the same age. In other words young males are more reckless drivers so their premium is more. Similarly if you live in a high crime rate statistically you are more likely to have your car stolen than if you live in the country.

When we seek a quote all this information is apparently applied in setting our individual premium. Is there anything wrong with that? Is applying reality and real life discrimination? There is already talk of breach of age discrimination in calculating premiums. Older driver’s premiums tend to be less – because (it is argued) they have more experience and drive more carefully (probably because as you get older you become aware of your own mortality!!). It is important to avoid discrimination of any kind and the law has worked hard to ensure that individuals and organisations act honourably, fairly and treat everyone equally.

However reality should not be ignored. Older people are more likely to die than younger people. Older people do have more experience. It is a fact of life and applying the reality of life is surely not always discrimination – or is it?

Bettina Brueggemann, Managing Partner, Hart Brown