The impact on women on the removal of gender as a rating variable in motor-vehicle insurance
Abstract
Insurers use actuarial statistics as rating variables to differentiate and distinguish for
the purposes of risk classification. They justify their use of actuarial statistics due to
its accuracy as a predictor of risk. South African motor-vehicle insurers use gender,
inter alia, as a rating variable to classify risks into certain classes and to determine
insurance premiums. Depending upon whether the insured is male or female, it
could have a significant impact on the cost of his or her premium. Women drivers
pay less for motor-vehicle insurance because actuarial statistics indicate that women
are more careful drivers and are involved in 20 per cent fewer accidents than men.
Men pay higher premiums because the statistics indicate that they are less
responsible drivers than women.
Should a South African court decide that the use of gender as a motor-vehicle
insurance rating variable is unfair discrimination, this would benefit male drivers, as
it would lower their premium. Women, on the other hand, would be disadvantaged
as they would be required to pay higher premiums to subsidise men. The article
examines the impact that the removal of gender as a rating variable in motor-vehicle
insurance would have on women, and asks if the effects thereof would influence a
South African Court’s decision in determining if the use of gender as a rating variable
amounts to unfair discrimination.
The article first considers the findings of American and Canadian Courts in
determining this same issue and then considers South African equality legislation, particularly the Promotion of Equality and Prevention of Unfair Discrimination Act 4
of 2000 (“the Equality Act”). Thereafter, the article provides recommendations for a
South African Court.
As the Equality Act indicates that the discriminatory insurance practice of placing a
disadvantage or advantage on persons based inter alia on their gender may possibly
be unfair, it is suggested that South African insurers would have to consider
alternative methods of risk assessment. In the light of the American and the
Canadian case law, the article suggests that there should be a change of approach
to insurance risk assessment. Rather than using gender as a rating variable the
insurer could assess the risk of the individual insured, using appropriate, neutral
rating variables suited to the particular circumstances of the insured. This would
require a much more intensive and individualised risk evaluation and would require
the insurer to “tailor-make” insurance for each individual. It is submitted that such
an approach would give effect to the right to equality by disallowing the use of
gender as a rating variable without producing the undesirable consequence that
women drivers would have to subsidise men.