Women Paying More than Men for Auto Insurance? An Overview and Analysis


People often think that it is men who pay more for auto insurance and women pay less. However, it is just true for young adults. A few studies of 2017 and 2018 says, women who are about 25 years or more, especially between 40 to 60 years, pay more for car insurance in California than men. Considering this fact, California has banned the setting of auto insurance costs on the basis of gender.

A regulation is imposed on individual automobile insurance in California to prohibit the practice since January 1, 2019, which was issued by the former California Insurance Commissioner David Jones.

According to Jones, the insurance companies should set the premium based on the accident history of the driver, the number of speeding tickets and other factors related to driving. But it is entirely unfair to set it by considering the gender of the person.

Reasons behind the Difference

Is there any reason behind setting such different premiums for men and women? The insurance companies like Geico, Farmers, and Progressive were not able to answer properly when they were contacted by Stateline.

According to Janet Ruiz, the spokesperson of the trade group the Insurance Information Institute, the car insurance companies consider many criteria to set the premiums. She expressed that before the new regulation was issued, gender was the least important amongst all important criterions.

Ruiz did not agree with the report of 2017, analyzed by the Consumer Federation of America, which shows that women are charged more for car insurance than men.

The Actuarial Data Support for Setting New Rate      

The state chapter of the American Property Casualty Insurance Association claimed while presenting comments to the California Department of Insurance that, gender is being considered for car insurance from around thirty years in California and it is “based on actuarially sound principles” and “gender statistics”.

On the other hand, Daniel Schwarcz, a professor at the University of Minnesota Law School thinks, the insurance companies need to consider things like the actual number of miles driven, the number of years customers have been driving and where they live, if they are not allowed to use “out-dated stereotypes based on generalities” about men and women.  

The Consumer Federation Study report of 2017 revealed that the women between 40-60 years, even with perfect driving records pay nearly twice of men for the basic auto insurance coverage. And the 2018 study by Texas Appleseed found that women in Texas must pay $56 more than men, on average. Besides, single and divorced women pay even more than men in a similar condition. So, there was a clear picture of gender discrimination. The new regulation has its good effects so that women do not have to pay more for their auto insurances only because of the ‘F’ mark in the gender column.

As there are approximately 170 companies selling auto insurance for the individuals, there will be a lot of choices and variations for the drivers. The insurance companies are subject to submit new rating plans to the California Department of Insurance by June 30. All of the insurers have to submit their new rate chart and those will be effective only after reviewed and approved by the Federation.

But according to Schwarcz, the Californians are not going to see a substantial change in the marketplace for insurance. 

Largely, the auto insurance companies should set rates, which must be adequate, reasonable, beyond gender discrimination and affordable.

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