Insurance prices due to rise

Experts are urging consumers to buy insurance ahead of new rulings which are expected to greatly increase the price of premiums. It is anticipated that the costs of life, health and motor insurance could increase by 25 per cent by the end of the year.

The European Court of Justice has passed a new ruling which states that all insurers must use gender neutral pricing schemes and directives from December 21, 2012. Previously, insurers were able to influence their pricing structures on statistics showing that men die younger than women and young men account for more motor vehicle accidents. As a result, male insurance policies have long been more expensive than womens. However, the directive sets to ban all policy discrimination determined by gender by the end of the year.

The ruling is also expected to impact the amount of tax insurance companies pay to HM Revenue & Customs. Although life and motor insurance is a typically competitive industry, many companies may use the ruling and new tax implications as an opportunity to bump their prices even further to boost their profit margins. Although the directive does not come into effect until December, insurance companies don’t have to wait until then to raise their prices.

Existing contracts will not be affected, but insurance experts advise that customers who are eager to avoid the increase should consider renewing or topping up their existing policies as early as possible. Many high-value policies may now require medical reports from doctors or GPs so that the insurance companies can assess individual risks more accurately without depending on previous pricing strategies. Customers who may require these reports are being urged to complete them sooner rather than later to account for any delays that may occur. However, avoiding the new pricing may simply be delaying the inevitable as, if insurers can no long price customer’s risk as accurately as before, the added cost will always fall on the customer.