Tuesday, 1 March 2011

Sex discrimination and insurance

Even a broken clock is accurate twice a day, and this morning's European Court ruling on the legality of sex discrimination in insurance claims was welcome and right.

It is of course true that male drivers - especially young male drivers - cause more accidents than female ones. On that basis, many people (most of them, strangely enough, men) seem to have bought the insurance industry's self-interested case that offering women lower premiums is somehow fair. It isn't. Men are not, generally or on average, more dangerous drivers than women. The majority of drivers, male and female alike, do not cause accidents. It's just that, of the minority of drivers who are reckless, most of them happen to be men, and a high proportion of those are young or inexperienced. Culture or testosterone may be relevant factors for those drivers, helping to explain the differential. But even young male drivers are more likely than not to drive safely. Penalising half of all drivers on the basis of their genitalia is thus not fair at all.

Insurance works by spreading risk among a large number of people: in motor insurance the cautious subsidise the reckless, and since there are fewer of them, the reckless get by far the best deal (until, that is, they have demonstrated their recklessness by causing accidents, at which point they may struggle to find anyone willing to insure them at all. In life assurance and pensions plans the prematurely dying subsidise the long-lived, and centenarians scoop something of a jackpot. Women, on average, live longer than men, and on this basis have lost out in pension calculations. But all this means is that there are more older women than there are older men (and many more female centenarians). The gap, though, is narrowing, and may owe almost as much to lifestyle factors than to a biological predisposition. Even the fact that more men die in accidents skews the figures somewhat. The actuarial difference does not mean that any particular man is likely to die sooner than any particular women, or that any given male driver is a greater accident risk than any given female driver. Yet that is how the insurance industry treats people.

Imagine that it was discovered that statistically gay male drivers were less likely to cause accidents than heterosexual ones. Would it be acceptable for insurance companies to ask customers to reveal their sexual orientation, and to offer lower premiums to homosexuals? (It would be wrong forprecisely the same reason that sex discrimination is wrong: the low number of gay dangerous drivers would not cause any particular straight driver to drive badly.) What if being black turned out to be a risk factor for involvement in a car accident? I suspect few people today would defend penalising ethnic minorities in car insurance. Yet the principle involved is the same. I also wonder if the present scheme would enjoy such widespread assent if it was women who were charged more for car insurance - just try to imagine how the male equivalent of the Sheilas Wheels commercial would go down with the gender police.

Men are not dangerous drivers because they are men - if that were true, then the safe male driver would be in the minority. And if that were true, driving - for anyone other than a professional - would have been banned decades ago.