Women keep deal on lower car insurance

Women will continue to enjoy cheaper car insurance than men, following a British-led rebellion against an attempt by the European commission to brand the practice as illegal sex discrimination.

The government yesterday announced that Britain had led a successful rearguard action to secure an "opt out" for the insurance industry from a gender directive which forbids businesses to treat men and women differently.

Insurers had condemned the draft legislation, claiming that it could mean increases in premiums of 20% to 30% for young female drivers, who are statistically far less likely to be involved in serious accidents than their male counterparts.

Jacqui Smith, the deputy minister for women and equality, said that a "sensible argument" had "won the day".

Speaking on the BBC's Today programme, she said: "It actually didn't make sense to penalise safer women drivers by preventing insurance companies from differentiating on the basis of risk."

The gap between motor insurance rates for men and women has widened in recent years. Women in their late teens and 20s enjoy the largest discounts in comparison to men.

Diamond Insurance, which specialises in covering female drivers, points out that men are convicted of 92% of driving offences and account for 98% of dangerous driving convictions.

It says that both genders typically have the same number of accidents but while women are prone to minor bumps around town and "knocks when parking", men tend to do more extensive damage which runs up a bigger repair bill.

Malcolm Tarling, a spokesman for the Association of British Insurers, welcomed the commission's climbdown. He said: "We've been lobbying for the directive as originally drafted not to be introduced. Perversely, it would have penalised the people it was looking to protect.

"We support equality but we believe that insurers should be free to continue to use factors such as gender when it is relevant in assessing risk."

A study by the AA found that only 54% of women admitted aggressive driving, compared to 64% of men. Women tend to drive shorter distances, have lower annual mileages and typically drive more slowly.

However, the difference between the genders narrows as drivers reach the age of 30 and premiums typically even out.

Among motorists over the age of 75, men are regarded as a better risk and generally benefit from cheaper insurance.

Edmund King, director of the RAC Foundation, said: "It does appear that women take fewer risks - they're less likely to speed and they're far less likely to drink and drive."

The European directive was drawn up by the former social affairs commissioner, Anna Diamantopoulou, who last year defended its impact: "As with past breakthroughs in the field of gender equality, it is being greeted with pessimism. Gender discrimination in the access to and supply of goods and services is unacceptable."

The opt-out means insurers will be able to continue paying smaller annuities to women, on the grounds that they have longer life expectancy. Other sections of the directive ban sexual harassment and prevent mortgage providers from discriminating against pregnant women.

The legislation, much of which is already covered by British law, requires all 25 European member states to set up an equal opportunities body charged with promoting equal treatment between men and women.