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Equalities Bill 'challenges car insurance firm's pricing policy'

30 Jun 2008

The car insurance industry is expected to come under the spotlight due to its policy of using age as a deciding factor when pricing cover, it is claimed.

Under new measures expected to be announced this summer, the Equalities Bill will tackle age-based prejudice and put car insurance firms under pressure, according to uSwitch.com.

Research by the price comparison website shows young drivers are paying more than twice what other motorists are paying in car insurance, with an average premium of £989 compared to £459.

Ashton Berkhauer, insurance expert at uSwitch.com, says forcing car insurance companies to charge equally across age ranges could be counter-productive.

He explains: "Insurers have to price by risk and there is clear evidence that younger drivers are more of a hazard on the roads.

"If the Bill calls for pricing to be equal across all age groups this could lead to a rise in premiums for lower risk, safer drivers, who would effectively be subsidising their higher risk counterparts.

Recently, Strathclyde police launched an initiative targeting young drivers in the area after it emerged 89 people aged between 17 and 25 have been killed in road crashes in the Scottish region.