Calm Down David and get your Insurance right

I was named at yesterday’s House of Commons Prime Minister’s QuestionTime in a question asked by Jonathan Evans fomer Tory MEP, now MP for Cardiff North’s as follows:

“The whole House will be aware that younger women drivers face a massive hike in their insurance premiums next year as a direct result of a European Court judgement.In that context, therefore, does my Right Honourable Friend share my disappointment that this judgement has been warmly welcomed by London’s Labour Euro MP Mary Honeyball, who has indicated that she considers it to be ‘admirable’ and ‘the price of equality’.”

David Cameron replied “I have to say that it shows some of the loony left is still alive and well in our country, because frankly insurance premiums ought to reflect risk. My Honourable Friend as ever is displaying common sense, whereas the European Court is not.” (The attached one minute video is of this exchange.)

I became the latest in a long list to receive an insult from David Cameron, with the opportunity to sneer at an European institution no doubt giving him pleasure too. It is little surprise to find him siding with the insurance industry against consumers.

The current system where insurance companies use actuarial tables to assess drivers lumps people together into groups; this is unfair precisely because it assesses groups of people rather than the individual. But risk is an individual matter. Therefore drivers should be regarded as individuals and not as groups of drivers. The European Court’s judgment is about getting insurance companies to do their job properly, not allowing them to use this as an excuse to drive up insurance premiums for women.

As I wrote on 1st March:

‘There is no requirement for insurance premiums to last 12 months. Scooter insurance has led the way here with policies lasting three months which are substantially cheaper for a new driver with a new scooter rather than a second hand one.  Shorter timescales would solve the thorny problem of how to assess first time drivers. A sum could be demanded, based initially on the current category assessment, and then amended when the individual’s driving safety (or lack of it) could be worked out for that person based on their driving history. Risk assessment on an individual basis is, I am sure, a viable proposition in this age of computers.’

We all quickly become individually assessed with the “no claims discount” system. It would not be difficult for insurance companies to adopt an individual assessment approach when so much personal data is held about all of us. I think the European Court have made the correct judgment. The insurance companies should spend less time spreading scare stories and more time updating their systems so all applicants for insurance are fairly treated.

6 Comments

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6 responses to “Calm Down David and get your Insurance right

  1. I still think you are wrong, but if it is any consolation, I think that David Cameron is also on the “loony left.”

    He seems to have a loony attraction to the EU’s Marxist superstate which is being put together, not to mention his penchant for political correctness.

  2. Richard

    Quite right. Supermarkets manage to assess you individually within a matter of months once you’ve taken out a fidelity card and make you discount offers based on your purchasing patterns. If they can do it, so can the insurance companies.

  3. Daniel Oxley

    The political designations of right and left are not very helpful but if Mary belongs to the Loony Left, then Mr Cameron certainly belongs to the Loony Right.

    He and other conservatives tell us how much they deplore the ECHR; they cite the higher insurance premiums for young women, removing the names of sex offenders from their register, the requirement the UK to allow terrorists to remain here, the right of prisoners to vote, etc. They rant and rave about all this, they even tell us that it makes them sick to their stomachs but they don’t do anything about it. The UK is bound to the dictat of the ECHR by the Lisbon Treaty but if these Tories are so concerned they could leave the EU.

    I don’t agree with Mary’s stance on these matters but I do recognise that, unlike that of the Tories it is completely consistent. She approves of the Lisbon Treaty and the ECHR and either welcomes all the seemingly (to me) crazy consequences or accepts them as the price worth paying for our integration with Europe.

  4. Rob Francis

    Hi all,

    I put this in an email to Mary but the supermarket comparison doesn’t make sense (sorry Richard).
    Tesco can collect vast amounts of data every time a customer shops there – say once or twice a week. After six months, Tesco will have lots of data.
    By comparison, car insurance companies only get data if a customer claims. This doesn’t happen very often; in some cases not for several years. So it’s much harder to build up a picture of how risky customers are. This is exactly why insurance companies use proxies to price to the individual (e.g. annual mileage, years of experience, etc).
    Due to the tiny amounts of available data, it is virtually impossible for insurance companies to price to the individual as Tesco can – if they did, the premiums would be sky-high as the small amounts of information would give very wide confidence intervals and hence high premiums would be required to cover any potential liabilities. So instead insurance companies use proxies to price to the individual on average. This makes premiums cheaper and as accurate to the individual as it is possible to be.
    (I work in insurance).

    Cheers,
    Rob

  5. Dear MEP Honeyball,
    I am sorry to say that, not only were Mr. Evans and Mr. Cameron both mistaken about auto insurance, but you and the EU gender equality researchers were misinformed as well. On the occasion several years ago when the EU committee’s proposal was voted down amid a flurry of agitated press commentary and interviews with women who were under the impression that they were being given a break on their auto insurance “just for being women,” I tried without success to contact women MEPs who were said to be leaders on this issue to beg them to get the facts and stop talking nonsense about supposed harm to women being “the price of equality.”
    It is very disappointing to see the whole embarrassing spectacle being repeated to men’s evident enjoyment. Men understand that “benign discrimination” is a fraud on women.
    I will not test your patience with an explanation for the fact that my husband (Harvard BS and PhD, research geologist, previously Curator of Lunar Samples at the Johnson Space Center) turned skeptical attention to the facts supposedly supporting the use of “benign discrimination” in insurance arguments as a reason for denying women’s right to equal protection of the law that American men receive as a constitutional birthright but deny to women (ERA). Auto insurance, as a commonly purchased product, mandated in many states, and said, in the disingenuous wording used at the time, to be “a break for women,” was the selected focus of our research under the aegis of the National Organization for Women. The first publications and a lawsuit on the subject on behalf of adult women overcharged for auto insurance appeared in the 1980’s and have continued to the present day.
    Both industry and the academics who rely on them for support have done everything possible to suppress our analysis and remedy – while at the same time pirating and grossly misusing our breakthrough information on per-mile pricing of auto insurance. (Everything you hear these days about paying by the mile is some distorted version of our work.)
    If this subject on which you have taken some heat, as has the EU, is still of interest to you, and if you would like to understand why the EU remedy is totally incorrect and why the correct remedy would have no negative impact on women as a class – and if you can clear your mind of all the “good driver”-“bad driver” nonsense the insurers have taught everyone to believe, I hope that you and your staff will give serious attention to the following websites: http://www.centspermilenow.org and http://www.MileMeter.com.
    With sincere thanks for your impressive record of work on behalf of women,
    Twiss Butler
    Alexandria, VA 22314
    http://www.equality4women.org