Auto insurance premium determination will be increasingly gender neutral, but will it even make a difference?
California just became the sixth and most influential state to remove gender as a factor for setting auto insurance premiums. Gender was allowed to appear on insurance forms in California as an optional field. Now California joins Hawaii, Massachusetts, Montana, North Carolina and Pennsylvania as states where gender cannot be used.
The role of gender in assessing auto rates, or gender weighting, has been criticized of late. The state insurance commissioner of California Dave Jones promulgated the change in order reduce auto premium pricing to factors drivers can control. While it may be true that one gender may have less accidents, states are deciding it’s unfair to punish the entire gender on that data.
Impact on Rates
There is disagreement whether removing gender as a factor for setting premiums will have any effect on rates. According to quoting platform Zebra, premiums on the national level vary by only 1% between men and women. Women do not always pay less than men. One study conducted by the Consumer Federation of America reports that women over 25 pay 1% more.
The biggest impact of the change may come in the age bracket where men and women’s rates have the highest discrepancy--young drivers. Female drivers with three or less years of driving experience can expect their rates to rise by 6%, while males with three or less years will decrease by 5%.
Though gender cannot be used in California and other states, age still can along with marital status, location, occupation, credit history and of course driving history. The impact of the California may have a ripple effect, as California is frequently an early adopter of changes subsequently embraced by the rest of the country.