It is two years since the European Union announcement regarding gender equalisation.
In the weeks following the announcement, there was considerable media speculation about how insurers might differentiate their treatment of one sex or the other, to encourage the right mix of business.
Ideas include gender-specific commission rates, new underwriting factors, developing gender-specific critical illness products, or even “Sheila’s Wheels” style marketing aimed at one sex or the other.
Speculation centred around the extent to which an insurer might do so, whether doing so would leave the insurer open to the risk of being accused of indirect discrimination, or the risk that customers might select against insurers.
We are now two years on. What has happened? In the life insurance space, it does not seem like much. In Ireland, we have seen Irish Life offering added payments on term assurance with a sum assured in excess of €25,000.
For these policies, there is an extra payment of €5,000 upon diagnosis of five specific conditions that might arise during pregnancy. Clearly, these payments can only be paid to women. Would this be enough to encourage a young female to buy a life insurance policy with Irish Life, and would this skew the gender mix? Arguably, it might.
Probably not surprisingly, we have seen more innovation in the general insurance space, where young males previously typically pay double the premium of ‘identical’ young females. A favourite is a new general insurance brand: www.drivelikeagirl.com. Branded in pink with a heart over the “i” in girl, the company is clearly targeting young females. As it says on the tin, premiums will be cheaper if you drive like a girl.
The practice of using telematics technology – a black box under the bonnet provided by the company – monitors the insured’s driving and in particular speed of acceleration. If it falls within certain parameters – that is, if you ‘drive like a girl’ – you get a discount on premium rates, paid quarterly in arrears.
There is nothing to stop males applying – in the same way that they could go to a women’s hairdresser or clothes shop – but they are surely playing on the egos of young males. It is not certain how many 17 to 25-year-old testosterone-filled males admit to driving like a girl, but it would be reasonable to doubt many would.
Do the people from www.drivelikeagirl.com mind? No, of course not. They are firmly, and rightly, marketing themselves as offering heavily discounted premiums for safe drivers irrespective of their sex.
It is easy to start thinking about the bigger, wider implications of having insurer-driven telematics in a car. Will the black box know if a driver is breaking the speed limit, wearing a seatbelt, jumping red lights, or driving in the small hours of the morning? These things could and should be reflected in the premium rates and insurers might well do this in future.
And … could the next life insurance brand be www.livelikeanun.com?
The traditional way of offering beneficial premium rates is achieved by preferred underwriting.
An insurance company sends a nurse to the customer several weeks after the policy application is submitted, to record height, weight, take the blood pressure and so on.
The nurse would then report back to an insurance company underwriter, who would make a decision. The whole process is costly, inconvenient for the customer and could take several weeks if not months.
With the data that could be potentially collected by black boxes in cars, all of this medical testing might not be necessary. The box would have information about a whole range of items about the automobile owner that an underwriter might find useful, such as the make and model of the car driven (socio-economic indicator) and relative accident risk levels. The black box could also collect information so that an insurer would know of the applicants:
- go to school, and hence have children;
- go out socialising, where and until what time
- if they visit the hospital, doctors or pharmacy, and how frequently.
Although these items are not perfect measures of the risk, these could all be used in a simplified-issue underwriting process, which could be quick and easy, and appropriately targeted.
Add a strong brand and an appropriately designed product, and maybe we could have life and health insurance, designed to the need of one sex or the other, that could give a more favourable financial result to the insurer.