Points record is licence for car insurance firms to raise premiums

Anna Tims

Insurance firm retains driving penalty points on records after statutory period – the result: a higher car insurance premium

I got three penalty points on my driving licence that were removed last month after the statutory four-year period. But when I attempted to renew my car insurance I was told by my provider that it retains points on its records – and charges the consequently higher premiums – for five years. I have paid the price for my speeding offence; surely it's unethical that my provider should punish me for an additional year. DG, Woodford Green, Essex

You've guessed the reason: money. Insurers price their policies according to the perceived risk of a claim. The riskier a customer's profile is perceived to be, the more they'll be charged and, although new laws forbid firms from taking gender into account they are free to use other personal circumstances to calculate premiums.

Most insurers will require details of any endorsements or convictions for the last five years and, although you say this is the only time you've ever been penalised for speeding, if an insurer's claims history shows that customers with speeding convictions are more likely to make a future claim, it will judge you to be a higher risk even after your penalty has expired.

If you need help email Anna Tims at your.problems@observer.co.uk or write to Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Please include an address and phone number.

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Sheilas' Wheels promises few price changes for existing customers

Jill Insley

Women's car insurer becomes first to announce how it will implement EU's new gender directive

Sheilas' Wheels says the current gender profile of its policyholders will minimise price disruption.

Sheilas' Wheels, the car insurer specialising in providing cover for women, says its customers are unlikely to suffer a steep rise in premiums, despite new EU rules outlawing the use of gender for underwriting insurance.

The rules, which come into play on 21 December, are expected substantially to increase the cost of car insurance for women, particularly younger ones, who until now have benefited from cheaper premiums than their male peers because statistically they are less likely to have a serious accident. According to price comparison website gocompare, women in general will see their premiums rise as much as £300 a year, while those in younger age groups could suffer a £2,000 rise.

Many experts in the industry have speculated that insurance brands specialising in selling to women would suffer falling sales after being forced to raise their prices.

But Sheilas' Wheels said it was confident that the current gender profile of its policyholders will help to minimise price disturbance for the vast majority of its existing customers, with most seeing price changes of no more than 4% in either direction, or £12 on an average premium.

"This is because the current predominance of female drivers – which Sheilas' Wheels believes will continue as its existing customers renew – will help to influence premiums quoted for some time beyond the gender-neutral pricing implementation date due to female drivers' historically lower claims costs," it said.

Sheilas' Wheels has more than 450,000 female customers, but fewer than 50,000 male policyholders named as the main driver. The company's current selection against male drivers is shown by its quotes for a male and female driver aged 38, living in West Sussex and driving a VW Golf. The male driver was quoted a premium of £317.65, compared to £214.08 for a woman of the same age and address.

Esure, Sheilas' Wheels's sister brand targeted at all drivers, quoted a premium £30 cheaper for the man, at £287.

Jacky Brown, head of projects at Sheilas' Wheels, said: "Each company equalising prices ultimately needs to match premiums to claims, and our claims costs should continue to be relatively lower due to the sheer number of good, safe drivers who comprise our mainly female policyholder base today."

She added: "We have insured men from day one but our marketing has always appealed to women more – that won't change." The price of policies currently offered through Moneysupermarket includes a free spa treatment.

The insurer has become one of the first in the UK to clarify how it intends to implement gender neutral pricing. New customers applying for quotes will get the same prices regardless of whether they are male of female from 18 December, while existing customers will receive renewal invitations containing gender-neutral pricing quotes from 18 November.

From 18 November 2012, Sheilas' Wheels will progressively reduce its 30 day "quote guarantee period' through to 17 December. This will ensure that any gender-specific quotes issued prior to this date are not guaranteed beyond the point when it would be unlawful for a policy to come into force using such information.

The insurer will also temporarily stop offering car insurance quotes on 18 November to new customers for policies due to start after 18 December 2012.

Following implementation of the new gender rules, insurers will be forced to place more weight on the other criteria used to underwrite car insurance policies, some of which also include an element of gender. These include the policyholder's claims history, postcode, age of driver and car, occupation, class of usage, type of cover, modifications to the car and convictions.

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