Insurers at risk of indirect sex bias Lawyers have warned motor insurers risk being accused of indirect gender discrimination as new research suggested drivers in female-dominated occupations could be more likely to receive lower premiums. Since the EU's "gender neutrality" ruling took effect last month, insurers have been barred from quoting lower premiums to female drivers on the basis of gender alone. However, research due to be published by the AA on Wednesday suggests insurers are turning to other factors such as occupation or choice of vehicle to determine drivers" premiums. Although premiums have risen overall for young women since the ruling came into effect on December 21, the research is expected to show wide variations according to job type. For example, while the premium for a 23-year-old female student rose 5 per cent, the quote for a female secretary of a similar age in fact fell by about the same amount. Similarly, a 26-year-old female nurse would see a 2.5 per cent fall, whereas a 27 year old male in a factory job would see his premium rise by 20 per cent. "Legitimate proxies for gender, such as occupation or the type of car driven will significantly influence premiums," said Simon Douglas, director of AA Insurance, which compiles the premium index. Some men are seeing unexpected premium increases and some women decreases. However, legal experts warned that as well as being prohibited from explicitly calculating premiums on the basis of gender, insurers may also be banned from using factors that point to whether the insured is a man or a woman. Determining prices on factors that might suggest a policyholder's gender but have little or no bearing on the risks they present - such as shoe size or choice of car colour - is prohibited. But according to Treasury guidelines, the use of factors that might correlate with gender - including occupation - is "unlikely to be considered unlawful" if insurers can demonstrate they inherently contribute to underwriting risks. Individuals in some occupations may be more likely to drive more dangerous vehicles or at riskier times of the day, for example. The AA data do not provide evidence of gender rule breaches. "Insurers need to have a genuine belief that the insured's occupation poses a higher risk and therefore justifies a more expensive premium," said Ashley Prebble, partner at Norton Rose, the law firm. If you start giving nurses lower premiums on the basis that most nurses are women, that could well count as indirect discrimination. Audrey Williams, head of discrimination law at Eversheds, said insurers should take care to ensure they avoid "indirect discrimination risks." But she added that policyholders considering a challenge would require "strong evidence" of gender discrimination to make a legal claim. Consultants said much of the recent pricing discrepancies had arisen because of disruption caused by the new rules. "They have gone back to square one in calculating risk," said Mr Douglas of the AA. Insurers will be watching how the balance of their business moves following re-pricing of premiums so I expect further adjustments over coming weeks. Catherine Barton, financial services partner at Ernst & Young, said: "Insurers will have revisited their entire rating models when they removed gender, which will lead to price changes in a variety of customer segments. This could lead to male and female prices either rising or falling - so the impact of gender no longer being used may not always be obvious. The latest British insurance premium index from the AA is expected to show that young women missed out on a 3 per cent across-the-board fall in motor insurance premiums in the last quarter of 2012. The average quote for women aged between 17 and 22 was 12 per cent higher year-on-year at the end of December. Older female drivers have seen average premiums fall, but at a lesser rate than for men. The Financial Services Authority said: "Whilst we are aware that insurers may use a policyholder's profession in their assessment of the level of risk they pose, ultimately whether this is something that is in contravention of the gender directive is something that should be decided by the relevant courts."