The different prices for genders indicates there's a perceived difference in risk, an actuary says. Photo: RNZ / Marika Khabazi
If you have asked for a car insurance quote recently, you may have been asked your gender.
You might have wondered why it matters.
In a test by RNZ, a 42-year-old woman with a 2020 RAV4, parked in a Maunu, Whangārei garage, who has a clean driving history and no recent insurance claims was quoted $59.65 a fortnight for comprehensive car insurance with AMI.
The same scenario, except selecting "male" for the gender, was $58.99.
State quoted $58.70 for a woman and $58.06 for a man. Someone who said they were non-binary received the same quote as the woman.
AA quoted $53.83 a fortnight for a man and $53.87 for a woman.
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Consumer NZ insurance specialist Rebecca Styles said the organisation's most recent car insurance survey showed women were charged more by some insurers when they were middle-aged or older.
But when drivers were younger, men were charged more.
Comparison site Quashed said for a 22-year-old woman, insurance of $40,000 with a $1000 excess on that hybrid RAV4 would cost at least $169.64 a month for the cheapest option.
A man the same age would pay at least $185.98.
Chief executive Justin Lim said the premium for young male drivers ranged from 2 percent to 17 percent more.
It was especially the case for utes and trucks, he said, where young men could have to pay up to 24 percent more.
Styles said to provide car insurance quotes on the basis of gender felt a bit old-fashioned.
"With increased individualised pricing of insurance, you'd think it would be more about the risk factors for particular individuals rather than gender."
Jeremy Holmes, from actuarial firm MJW, said if there was evidence that something affected the risk to insurers, they would price it in.
"In a reasonably free and open market, the price will tend toward that which is implied by the risk.
"As an example, say Insurer A charges the same price for everyone regardless of risk. They would set the price so that, in aggregate, it's enough to cover their claims. Then along comes Insurer B who differentiates the price. Insurer B charges less for lower-risk people.
"What will happen is that all the low-risk people will shift to Insurer B and Insurer A will be left with people who, on average, are higher-risk. So Insurer A will need to increase prices which will exacerbate the issue."
He said the different prices for genders indicated there was a perceived difference in risk.
"This is known as anti-selection. The way to combat anti-selection is to charge prices that reflect risk. If we operate in a market where people are free to move between insurers then the insurers will need to price according to risk.
"In saying that, there is something of a 'social license' whereby insurers can generally only use a factor to differentiate the price if society accepts that it is a reasonable thing to do.
"Historically, most people have accepted that different genders present different risks and this has been a common rating factor for motor insurers. Although that view has gradually been changing. The EU implemented some rules back in 2012 to prohibit differential insurance pricing by gender."
Claire Matthews, a banking expert at Massey University, said it was becoming more challenging for insurers.
"It is likely there would only be limited data available on accident rates for the broader definitions of gender now used to allow statistical justification for gender-based premium differences, which has been used in the past. I think that's why some insurers will have stopped using it, and others probably have given it only limited thought."
A spokesperson for AA Insurance said it considered factors such as driving history, location, vehicle type and gender to ensure an accurate reflection of the risk it was taking on.
"For most products, gender is not a factor. However, for car insurance, our claims data shows that gender combined with age is a strong predictor of risk, so it is included when calculating motor premiums."
Vero said in 2023 it would no longer capture a person's gender for car insurance.
IAG, which operates the AMI and State brands, said its car insurance pricing was based on a number of factors, including a customer's age, where they lived, the make and model of their vehicle, their gender, as well as the sum insured of the vehicle.
"We use our claims data to see how different factors affect the cost and frequency of claims and this helps us set premiums that reflect the level of risk."
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