How these two auto insurers rate Gender X differently

Pembridge Insurance Company plans to start rating motorists who identify themselves as ‘Gender X’ in Nova Scotia, charging Gender X motorists the same as women, the province’s regulator announced Tuesday.

Through its Pembridge unit, Allstate writes home and auto insurance in Canada through brokers.

As it stands, Pembridge’s rating algorithm in Nova Scotia only recognizes the male and female genders, wrote David Almon, a Nova Scotia Utility and Review Board member, in the board’s May 26 decision.

Tuesday’s decision comes six weeks after NSURB approved TD’s new rates and risk classification systems.

In Nova Scotia, TD Insurance Group — which includes Security National Insurance Company, Primmum Insurance Company, and TD Home and Auto Insurance Company — will start by taking the average of what Gender X drivers would have paid had they been male and what they would have paid had they been female.

“Rather than taking the approach of charging the lowest rate, the TD blending approach is replicating, to some degree, the premium that a rating algorithm without gender would produce. If gender were removed, the experience of both male and female operators would be aggregated, and the combined experience data would be used to develop required premiums,” NSURB member Peter Gurnham wrote in the decision approving TD’s rate filing, released April 16.

TD Group’s new rating methodology is already in effect.

In a separate release May 20, LowestRates.ca released test data generated by its own quoting software showing men pay more than women — with all other factors being equal – in Toronto, Calgary and Montreal. The disparities shrink in older age groups.

In Nova Scotia, residents had already been able to make one of four choices (male, female, gender x or no indicator) when applying for a driver’s licence or photo ID card.

With NSURB’s May 26 ruling, Pembridge is now approved to assign the same premiums to Gender X drivers as females with similar characteristics, the NSURB member Almon wrote. Those changes take effect Sept. 2 for new business and Nov. 1 for renewals.

In TD’s case, a Gender X driver in Nova Scotia would be referred to a special unit within the underwriting department. The driver’s gender would be recorded in the client file.  The case would then be flagged for review at renewal, to make sure the premium is properly calculated based on the proposed formula.

“The issue with rating “Gender X” operators is what is the correct premium to charge?  Will the experience reflect better the characteristics of one gender over the other and if so, which gender is appropriate?  Some companies have opted to charge the lower of the male and female premiums for a risk with similar vehicle and driver characteristics,” NSURB member Gurnham wrote in April of TD’s rating methodology.

Since 2018, Ontario has allowed motorists to identify as Gender X. This was done to both accommodate and ensure the respectful treatment of transgender drivers and those who identify neither as male nor female, LowestRates.Ca wrote in an earlier blog.

Ontario’s decision to include Gender X on driver’s licences is good news because it allows people to live in a society that welcomes everyone, but also poses a challenge to the traditional rating system for auto insurance, brokerage Mitchell and Whale wrote earlier.

Feature image via iStock.com/Yackers1