Car insurance quotes fall for women as providers lose money

Car insurance prices have fallen for women as insurers try to claw back customers.

The price of car insurance for women has changed dramatically in the past few months after the European Union gender ruling came into effect in December.

Immediately afterwards prices rose by around 14% for women and fell around 8% for men, according to the British Insurance Brokers' Association (BIBA).

But new research shows a slight fall in the average price between December and January as insurers lower their prices, following a drop in demand.

Rising prices for women

Traditionally women have paid less than men for car insurance because they are deemed to be less risky.

Before the EU gender directive, women aged 17-18 paid an average of £2,700 while men of the same age would pay £4,400.

While in December prices did shoot up, they’ve now fallen again. This is because providers couldn't sustain keeping prices at such high levels and have had to push these down again to maintain customer levels and to avoid losing money.

Fluctuating prices

Young women have been hit hardest by the recent changes. BIBA has analysed different quotes over the past six months by using a selection of more than 300 direct insurers, brokers and comparison websites.

For example, when looking at a 23-year old woman driving a Nissan Micra, the average quote was £423 last August. This rose to £493 in December, but has now dropped back to £433.

The same pattern can be seen when looking at a 26-year old woman driving a Renault Cleo 1300. The average quote was £489 last August, which went up to £514 in December and is now down to £487.

In comparison, when looking at typical prices for a 20-year old male, with a Ford Puma, the average price in August was £4,600, which dropped to £3,927 in December and is now at £4,013.

It’s worth remembering that although BIBA has detected this change, it’s only been deducted by looking at a select amount of quotes.  The timeframe is also very small, as it’s only been three months since the ruling, so looking over a longer period will give a more definite picture of the reaction to the ruling when it comes to car insurance prices.

What the insurers say

When I approached most of the leading insurers, the standard response was that they had not seen much change, mainly because there hasn’t been enough time for the market to stabilise yet.

Vanessa Chance, spokesperson for LV=, confirmed that she expected to see premiums rise for young females immediately following the implementation of the gender directive, followed by a slight decrease as the market started to settle down.

“Prices have not returned to pre-December levels but they have fallen slightly across the board,” she added.

How to avoid rising prices

Younger drivers do have the option of using telematic technology to lower their costs.  This kind of technology, which monitors driving and rewards safer drivers with cheaper policies, has become a lot more popular since the EU directive.

Graeme Trudgill, spokesperson for BIBA, says applications for telematic boxes saw a fivefold increase last year and as it becomes cheaper, and more mainstream, this number is likely to grow.

As it’s now possible to use this technology simply with an app on your smartphone, it’s an easy way to save money – if you are a safe driver. Right now there are around 12 companies providing it but it’s likely to go mainstream this year.

You can find out more in our article - Car insurance: putting telematics to the test.

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