The danger of lying about gender for cheaper auto insurance

If a young male motorist is thinking of telling his insurer he is female for the sole purpose of getting a lower rate, there is some simple advice a broker can give: Don’t do it.

This is because a motorist’s insurance claim can be denied if the insurer takes position that the claimant does in fact identify as male and only identified as female to get the low rate, warned Christine Pratt, an Edmonton-based partner with Field Law.

CBC recently quoted a driver in Alberta as saying he changed his gender identity from male to female for the purpose of getting a reduced auto insurance rate. CBC, who did not name the motorist, quoted him as saying he is in reality “a man, 100 per cent,” but nonetheless changed his gender to female on both his driver’s licence and birth certificate.

“From what this individual has said to the media, he made an intentional misrepresentation by his own admission,” a spokesperson for the Insurance Bureau of Canada said Tuesday in an interview. “Insurers have the right to cancel the policy if someone that they have insured made any fraudulent claims or misrepresented themselves.”

If a motorist does this, a broker should advise the client that a claim could be denied on the basis of misrepresentation, the IBC spokesperson said. This would be the case if the insurer takes the position that the claimant really identifies as a male and the only reason the insured said he was female was to get the lower rate.

That motorist’s application for insurance could be deemed “a fraudulent misrepresentation and could vitiate his coverage,” Pratt said in an interview.

“Insurers do use gender as a risk factor and they are permitted to do so by regulators,” the IBC spokesperson noted. “Data shows that there are gender differences with respect to risk, but they do diminish as the drivers age. So generally by the age of 25 the risk factor starts to diminish, both male and female.”

It’s been more than 25 years since the issue reached Canada’s highest court.

In Zurich Insurance Co. v. Ontario (Human Rights Commission), a divided ruling released in 1992, the Supreme Court of Canada ruled that Zurich can use age, gender and marital status as a rating factor in Ontario auto. In 1984, the Ontario Human Rights Commission had upheld a complaint from Michael Bates, who argued it was against human rights laws to charge higher rates on the basis of age, gender and marital status. Zurich was successful on appeal, arguing that in the 1980s, there was no “practical alternative” to using those rating factors.

In dissenting arguments, Justice Beverly McLachlin (who went on to become Chief Justice of Canada) noted that Ontario’s superintendent of insurance had been pushing since 1977 to stop discriminating against young males.

An Ontario law that would have prohibited the use of age and gender as auto insurance rating factors was passed in 1988 but repealed and never came into force.

Citing Zurich v. Ontario, the Albert Court of Appeal upheld the use of gender as a rating factor, in Co-operators General Insurance Company v. Alberta Human Rights Commission, released in 1993. That case arose in 1988, when Adrian Watters filed a human rights complaint against The Co-Operators.

Alberta’s appeal court sided with the insurer, finding that the use of gender does constitute discrimination but is nonetheless “reasonable and justifiable in the circumstances.”