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March 03, 2022

Does your auto insurer discriminate by gender?

In almost every walk of life, there’s a bad apple that spoils the bunch.

489145_alarm_positron_2 Like, with postal workers. Remember when those USPS employees shot up their offices a few times in the ‘80s? From there on out, “going postal” became known as losing all reason and lashing out in violence. For a time, every honest, hard-working mailman on earth became known as a psychopath because a few colleagues went crazy.

Car insurance? Same damn problem. The handful of the world’s meathead guy drivers that get pissed-up and crash into walls has ruined it for everyone else. Insurance companies see under-25 males as about as stable as Charlie Sheen at a Libyan protest (hey, topical!) behind the wheel.

But is relief on the way? For drivers under 25 in Canada, discrimination has long been at play. Because of insurance companies’ perceptions of young, male drivers – no matter how deserved they may be – policy costs are sky-high. By contrast, women drivers under 25 pay peanuts, relatively speaking, for automobile coverage.

A few high-ranking European officials have ruled this should stop. Earlier this week, the European Court of Justice said insurers will no longer be able to consider gender when pricing insurance policies for drivers.

That means that, starting in December of next year, the stereotypes get stripped away. According to U.K. newspaper the Mirror, women drivers under 25 could see their policies increase by at least 25 per cent, while guy drivers under 25 could see their policies come down by about 10 per cent.

Justice? That’s a tough sell, especially for women who are set to have their wallets lighten. But tell any young male driver with a good record that he should subsidize the reckless habits of a few, and he’ll tell you just how offensive the existing system is.

The big question: will Canada follow suit? By the Insurance Bureau of Canada’s count, five provinces allow insurers to account for gender when quoting auto insurance policies (Alberta, in addition, allows gender consideration for private polices, not those that are government-mandated). Yet, even in the wake of the European ruling, sources say Canada is unlikely to force its insurers to ban gender-based pricing.

“I am confident that while some may look at Europe, we would have to reflect long and hard before changing something that was so fundamental in identifying risk,” Frank Zinatelli, VP of legal services at the Canadian Life and Health Insurance Association, told QMI Agency.

“The system that is used in the life (and auto) insurance industry tries to reflect risk, so the use of gender is important.”

To anyone outside the insurance biz, this reads, “Why would we give drivers a fair and reasoned quote? Where’s the profit in that?”

Do you think Canada’s insurers discriminate drivers based on gender? Similarly, are male drivers under 25 charged too much for coverage?

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...