Widows charged higher for car insurance
Earlier this year the Consumer Federation of America (CFA) published a report on car insurance premiums that had some startling findings. The report found that car insurers were varying rates considerably for people of different marital statuses, the most notable of which perhaps being the fact that there was a significant increase in premiums for women whose husbands had passed away. The report also revealed similar increases for drivers who were single, separated or divorced.
“We knew that many insurers charged single drivers higher rates than those who are married, but we were quite surprised that many insurers raise rates on women recently widowed,” said CFA executive director Stephen Brobeck, who also called on state and government departments to regulate this sort of activity, “They need to pay attention to this and they need to understand it better. When they spot abuse and unfairness, they need to address that and mitigate that.”
Australian insurance comparison site Artog suggests a similar form of prejudice is at play in Australia regarding car insurance premiums, noting, “Both age and marital status can affect your car insurance premium… Married drivers are also commonly less expensive to insure than single drivers are.”
This is claim backed up by Australian company Real Insurance which suggests, “Traffic incidents involving married individuals also tend to be less serious than those involving single individuals. As a result, most insurance providers will charge much more for single drivers.”
In the CFA report it is suggested that there isn’t necessarily grounds for the rate increases (which in some cases was as much as 226 per cent for new widows) as there is no data to suggest that drivers who are recently widowed pose more of a risk than drivers who are in a relationship.
“Hiking rates on women whose husbands die seems both unfair and inhumane,” Mr Brobeck added in an interview with American news network NBC. “Why don’t insurers instead emphasize driving-related factors such as accidents, traffic violations, and miles driven in their pricing?”
For the report the CFA researched rates for women of varying ages (but perfect driving records) in 10 cities and found that four out of the six major insurers increased rates on liability coverage by an average of 20 per cent. One of the US’s biggest insurers GEICO charged widows up to 226 per cent more!
Insurance Information Institute actuary James Lynch contested the CFA report, telling NBC News that while charging widows more “sounds cold and calculated” there is data insurance companies are using proving, “married people are less likely to be in an accident.” But the CFA disputed Mr Lynch’s retort, noting there is a 1% difference in data obtained from 1994, but highlighting the fact that that comes nowhere close to the 20% increase insurance companies take.
“The ‘widow penalty’ and other pricing related to marital status provides still another reason for state insurance departments to examine insurer pricing more carefully,” said CFA director J. Robert Hunter in a press release statement. “Auto insurers are increasingly using non-driving factors in this pricing ... [much of which] is unrelated to insurer risk.”
And it’s not just happening in America. In a piece on anti-discrimination trends in Australia, the Institute of Actuaries of Australia notes that while Australia’s Commonwealth, State and Territory Governments have anti-discrimination laws in place to protect people of all age and marital statuses (like widows), insurers are exempt to discriminate, “Based upon actuarial or statistical data on which it is reasonable to rely.”
The question of what data is considered “reasonable” to rely on however, remains a persistent one.
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