I’ve always liked the story of the sharp young insurance salesman. Fresh out of training, he was out on his first solo day touting for business, and he sold a large life-insurance policy, on very favourable terms, to a man of ninety-one.
His boss was horrified. “Why on earth would you offer those terms to a man of ninety-one?”, he asked. “Well”, replied the salesman, “I checked the actuarial and mortality tables, and I found that very few men die over the age of ninety-one”.
The EU has embarked on a course of action that is equally stupid, equally at odds with reality, and potentially as damaging to the industry. Obsessed by its “anti-discrimination” mono-mania, it’s decided that it’s wrong for insurers and other financial institutions to offer different terms to men and women based on their sex. The result is likely to be dramatically lower (some estimates suggest 30% lower) annuity rates for men, and much higher car insurance premiums for women. In some cases one or the other sex may be a bit better off, but industry estimates suggest that in the aggregate, consumers will get a worse deal. And there is likely to be considerable damage to the industry. Yet again, EU rules compromise the success of the UK’s vital financial services sector.
Let’s be clear about this. Differential insurance rates offered to men and women are nothing whatever to do with prejudice, or discrimination, or gender-stereotyping. They are based simply on hard, factual, statistical records of actual claim rates, and accident rates, and mortality rates.
It’s possible to rate the risk of (say) a driver’s insurance policy based on a huge range of factors: age, sex, post-code, claims record, health factors, and of course the vehicle covered, and it is right and sensible that premiums should reflect risk, insofar as it can be objectively assessed. To remove a key risk factor from the mix is to drive a coach and horses through the industry — and to penalise unfairly (for example) women drivers, who by-and-large are safer than men. Sheila’s Wheels will find that the wheels have come off their business model.
If the EU is outlawing discrimination on grounds of sex, how long before it outlaws ageism, and makes my opening anecdote a reality? Or outlaws discrimination on health grounds, so that the sick and the healthy pay the same health insurance rates?
We still await a ruling of the European Court on this issue. But the betting is that the ruling will come in, and if it does, the consequences will be perverse. Within the UK, insurance will clearly become more attractive to bad risks, who will get cheaper premiums, and less attractive to good risks, who will pay more. Inevitably this will bias the customer base of the industry more towards bad risks — driving up premiums for all.
I don’t know the rules on cross-border insurance, but under the new EU proposals it would make sense for a British woman to buy car-insurance on-line from (say) a US provider, who will still have a rational premium structure, and it would make sense for a British man to buy an annuity abroad in the same way. Be ready to cover your ears, because here comes my most consistent theme: yet again, EU rules threaten to drive business, and investment, and jobs, out of the EU altogether. If this scenario comes about, then yet again the good business goes overseas, the bad business remains, and costs and premiums in the remaining UK industry go even higher.
EU regulations are becoming increasingly perverse and damaging — and disproportionately damaging to Britain. We should be Better Off Out.
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This new set of EU laws will almost certainly, be just as damaging to British interests as Roger describes. Yet again, this demonstrates how many EU laws and regulations routinely impact upon the lives of ordinary citizens. Clearly, these changes to a fundamental way in which insurance premiums can be calculated – will distort the market adversely. Also, genuine concerns regarding the different levels of risk for various groups of motorists will be undermined. This development is demonstrative of the EU tendency, to value ideology over the needs of citizens. Until our country leaves the EU, problems such as these will continue to damage our economy – and undermine the wider interests of society as a whole.
Roger, again you alert us to another deleterious market distorting judgement or policy from an EU institution and the real consequences.
It is of great concern that Cameron and the conservative leadership seem to accept the nonsense that emanates from the EU, rather than resisting it by getting parliament to rule that foreign nonsenses do not apply in the UK.
I note the House of Commons is passing an act to say it is sovereign (before it forgets) – if only it would act so, and be rid of the EU. We need a modern day Cromwell.
Maybe the vote on voting rights for prisoners will stiffen the resolve of government and lead to a rolling back of the human rights culture. Perhaps we should leave the ECHR altogether.
This is yet again more damaging EU interference in UKs internal affairs !
We still have not had a Referendum on wether we wish to be integrated into a European State.
My answer would be PULL OUT ALTOGETHER NOW !!
“under the new EU proposals it would make sense for a British woman to buy car-insurance on-line from (say) a US provider”
Actually, I don’t think so. When I left the UK some 5 years ago, my insurance premium was in the region of £250 (reduced for age and no claims). In the US, despite a similar history, it is well over $1000 each year. The same applies to home insurance.
I wouldn’t advise anyone to have any dealings with the rapacious American insurance companies if they could possibly avoid it.
Dear Mr Helmer. Why if you and your Conservative collegues are so Euro sceptic why do allow yourselves to “whipped” from London. Why don’t you tell Cameron to shove it on principle – bad career move perhaps?
Brian Kidd. Deal KENT ENGLAND.
We aren’t. We almost never receive suggestions from London on how to vote — and on the rare occasions when we have, I at least have continued to use my own judgement — as for example when the were supposed to vote in favour of the EU diplomatic service.