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No sex please, we're European

A big change is coming on the December 21st this year. No, not the Mayan calendar end-of-the-world nonsense, but the implementation of the EU Gender Directive.

For years, men and women have been offered different rates based on their gender’s statistical risk. So, men tend to be riskier drivers, women tend to live longer lives, and the insurance industry has used that to help decide costs.

This has long been controversial and many men claimed it as a victory when the EU ruled that insurers could no longer discriminate in this way. However, it’s not as simple as it sounds and both sexes will lose out in some way.

Here’s what’s changing and what it means for you.

Car insurance – women lose

Probably the best-publicised example of insurers discriminating by gender has been car insurance. Men have paid far more than women for their cover in recent years. In fact, young female drivers have been paying up to two-thirds less than their male counterparts.

And while the difference lessens as drivers gain experience, women have been making quite a saving.

But that will all change on the 21st. The Treasury has estimated that women’s car insurance premiums could rise by 24% on average. According to the price comparison site, that means that women aged between 17 and 25 will pay an average of £299 more a year.

And men shouldn’t chuckle. Although some industry analysts have said they might see a slight fall in premiums, others have suggested that insurers will simply increase the cost to women.

What can you do?
If you’re a female driver then this is bad news; car insurance is already a major expense for many people.

Women who are due to renew soon should do so immediately, before premiums rise. That way they can still have another year of lower prices.

However, there are other ways for motorists to keep their insurance costs down. Newly-qualified drivers of both sexes can take the Pass Plus extra training, to help them negotiate premiums down.

Men and women can keep the cost down by driving cars which are more popular with females – insurers will still look at the claim statistics of different car models.

Another excellent option is to sign up to a telematics car insurance policy, where the black box shows an insurer how well you personally drive. This kind of policy will allow good drivers to save money regardless of their gender.

[Related feature: Are you a good driver? Then you can pay less for insurance]

Annuities – men lose

Men are hit hard in the pocket when it comes to retirement income. When you retire, you need to convert your pension pot into an annuity to give yourself a guaranteed annual income for the rest of your life.

At the moment, men can get higher payments than women, because they don’t tend to live as long. According to LV, annuity rates for men have previously been around 5% to 8% better for men than women.

However, the changes to the rules mean that this will no longer be allowed, and men’s income in retirement is likely to fall as a result.

One insurer has already adjusted its rates to make them gender neutral. A 65-year-old man with a £25,000 pension pot used to receive £1,416 a year. However, as a result of the EU directive, that now falls to £1,389.

What can you do?
Many insurers have already begun adjusting their rates and an annuity purchase is not something to rush.

The best way to secure the highest payment is to shop around at retirement and not simply buy your annuity through your pension provider. It can be a good idea to contact a financial adviser who can help you find the right deal.

It’s also important to highlight any medical or lifestyle issues you have, such as any illnesses, high blood pressure or obesity. These could allow you to qualify for a higher rate as, to put it bluntly, you’re less likely to live to a grand old age and cost the provider more.

[Related feature: Guide to annuities]

Life insurance – women lose

Statistics show that women tend to live longer than men. Because of that, they’ve paid less for life insurance over the years as they have been less likely to claim.

However, now that insurers can’t factor gender in, there are likely to be some real changes to policy prices for women.

The website suggests that a 45-year-old, non-smoking woman taking out level term insurance for £150,000 over 30 years currently pays £22.34 a month, on average.

However, after the Gender Directive takes effect, she’ll pay £29.04 a month – that’s an extra £2,412 over the policy term.

What can you do?
The best way for women to avoid higher rates is to take out a fixed rate policy as soon as possible, before the 21st December deadline. Some insurers take several weeks to arrange a policy, so it’s important to check if yours can arrange cover in time.

Although gender can no longer be used to work out premiums, insurers can still look at your general health. So, ditching cigarettes, losing any excess weight and taking up regular exercise can all reduce the amount your premiums, whatever your sex.

[Related feature: Less than two weeks left for cheap life insurance]