The business of insurance is built on mathematically calculating risk based on a variety of conditions: you pay more for travel insurance if you're skiing because it's more likely to result in a claim than sitting on a beach for a week. The calculation of risk is based on the mathematical evaluation of evidence. The mechanism of prejudice is based on making judgments regardless of evidence.
So in light of the latest EU dictate, ruling that it is discriminatory to charge women and men differing amounts for their car insurance even though women are proven to have less accidents and make less claims, what happens next?
Does it become ageist to ‘discriminate’ on the basis of age? Does it become unacceptable to base health insurance premiums on the state of health of the claimant, on their family medical history?
If that happens, the whole mechanism of risk analysis is threatened. Insurance companies will be forced to calculate risk as they currently do (because it’s the only way that makes sense), but then to make up their costs elsewhere.
Someone somewhere will be forced to pay for that and, inevitably, it’ll be the consumer that suffers. This time it will be based on a genuine unfairness: yes, you’re a safe driver, but your insurance premium has doubled because that little boy racer in the suped up Citroën has just rammed his front bumper through the window of Argos. Again.
The repercussions for targeted insurance brands like Sheila’s Wheels or Diamond are clearly significant.
Going after certain low-risk segments of society – women or the over 50s, for example – let these insurance brands engage their audience, tailor services to them better, and, crucially, stand for something in a world where the only other option is to dress a man up in an elephant suit or anthropomorphise a phone.
Where the comparison sites have catalysed the rampant commoditisation of the market, this ruling has delivered a potentially devastating body blow. There is now virtually no way to differentiate your brand.
The comparison sites stop you differentiating on the basis of price or service extras; and now you can’t differentiate based on the type of service you deliver either.
Somehow, the industry is going to have to try and innovate beyond their current product and service offering. The smart brands might decide to extend their service into something delivers more interaction with their customer and gives people more of a reason to actively choose them and to stay loyal.
For example, protectyourbubble.com wouldn’t just insure your gadgets, it would provide an IT service and a virtual back up for all your data. Sheila's Wheels might not be able to offer cheaper car insurance to women, but they may try to become the experts in the female driving experience and create products and services tailored to that.
Whatever the case, the road ahead looks far from bonzzer.