Should Men And Women Pay The Same?

By Author: Marcus Stalder
Total Articles: 491
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These are the days of political correctness where, on issues of gender, race, religion and other divisive issues, we are expected to remain civil and avoid anything that might stir up trouble. This actually makes life quite difficult because, if real change is going to be made, there must be an honest debate about the issues. So, for example, should men and women receive the same pay for the same work? This should not be controversial. If the employer benefits equally from the work done by both sexes, there's no reason to reward one more than the other. Except there's no transparency. Only a tiny percentage of employers make pay grades public, so it's almost impossible to discover whether any group of individuals is being paid less than the average for that type of work. Now let's turn the question around. Would you expect a man to be asked to pay more just because he's a man?

It's a statistical fact that women live longer than men, so let's say a man and a woman of the same age ask for quotes to buy a life insurance policy with the same guaranteed death benefits. If the insurance companies base the quotes on the math, ...
... the man pays more because he will live for fewer years. There are two reasons for this. First, the man may not work for as long before ill-health forces retirement, i.e. the payments will stop. Second, as women live longer, there are more years for the investment of the payments to build up in value. So women can expect to pay less than men for the same product. Except this would be a positive discrimination on the basis of sex. Presumably that's illegal.

Moving on to insuring drivers, it's a statistical fact that women are safer drivers than men. They are more likely to obey the law and generally drive less recklessly. So even if they are involved in accidents, they are traveling more slowly and so there's less injury to passengers and less damage to the vehicles. Because premium rates are based on the risk an insured will claim, women should pay less than men. Except, unless the insurance company offers a women-only policy, men and women are grouped together so there's no problem in giving to same rates to individuals with the same safety records. The averages will simply show that women pay less than men.

Earlier this year, the European Court ordered the Member States to stop all discrimination. The Court's reasoning is interesting. Insurance is about sharing the risk. That always means the good, the careful and the long-lived subsidize the rest. No one is quite sure how the insurance industry will react. Everyone is waiting to see what new laws are proposed. So here's the question for you. How should American insurers set the auto insurance rates? Should men and women automatically pay the same, or should women be rewarded because they drive more carefully and claim less often? Or perhaps that's a false choice. Do you think women should pay more, i.e. be made to subsidize the bad male drivers? The next time you're getting auto insurance quotes, think about this issue. Should everyone have an incentive to drive like women because the rates for all will come down?