Gender “X” Being Offered by Insurers in Canada

When insurance is being priced, insurers will often look at the individual policyholder’s demographics to get a better grasp on their risk profile. Historically, male or female were the only options, and auto insurance stats tended to view male drivers as riskier, up until a certain age. Similarly, Canadian identification documents once only had two options for identifying gender.

Then, in 2017, Ontario added Gender “X” as a gender option for driver’s licenses.  This was done to ensure the equitable, fair, and ethical treatment of people who have a non-binary gender or trans identity. The change can easily be done by Ontario drivers through ServiceOntario, at no additional cost and with no additional requirements necessary.

As a result, many insurance companies – including Economical Insurance, who Excalibur Insurance writes for – are offering Gender “X” as an option on insurance applications. Here’s what that means, what that might look like, and how insurance companies are taking steps forward for unbiased insurance pricing for every policyholder.

How are premiums rated for gender “X” drivers?

As you may already be aware, auto insurance in Ontario is typically priced higher for men than it is for women – most notably for younger men. In fact, younger men (men under the age of 25) see the highest insurance rates of virtually any demographic.

Other factors have a part to play, of course. Factors like age, driving record, insurance history, where you live, how often you drive, etc., are all considered when your insurance is being priced, but since gender is considered a factor, it’s not exactly cut and dry on how to insure someone who might not identify as neither a man nor a woman.

So, what about gender “X?” Well, since only one in 300 people in Canada age 15 and older are non-binary or transgender, there isn’t an industry standard across Canada for drivers who identify as gender “X” just yet. There are regulators in multiple different provinces who have approved different methods, but each insurer may rate differently with whatever line has been approved by their respective regulators. All in all, there’s just a lack of credible data now, so it can’t really be said whether gender “X” drivers pay more or less than a man or a woman.

The question of “fairness” when pricing gender “X” drivers.

The determining of insurance rates for gender “X” insurance customers can be at the company’s discretion, and rates will always vary from one insurance company to the next. In Alberta, it looks as if a few companies have started to embrace the implementation of the gender “X” marker and are looking to charge lower premiums (or premiums equivalent to female rates.) From a pricing perspective, this boasts the question of whether this pricing is fair. Unfortunately, there’s no way to answer this question without accurate data – which, now, we lack. There are decades of statistics to show the risk difference between men and women and very few years of having gender “X” licensed drivers to build up a decent reference point.

The insurance industry has already gone through radical changes over the last few years, like the implementation of artificial intelligence in underwriting, the question of how to insure autonomous vehicles, and the rising danger of climate change effects. Ultimately, gender orientation and the question of pricing insurance fairly for every policyholder might be an ongoing battle for the coming few years until we can get accurate data.

Is gender something we should even still be using when pricing car insurance premiums?

Gender has, historically, been a factor auto insurance providers have used to price policies because of the statistic difference in claim likelihood between men and women. Men are generally more likely to engage in risky driving behaviour and may be involved in more at-fault accidents, receive more speeding tickets (although how speeding tickets impacts car insurance varies depending on the severity of the instance and the circumstances) and so on.

But as Canadians and Ontarians may now be able to identify as gender “X” on their driver’s license, the question of whether gender being used as a pricing point is a good thing comes into question. There has been a history (largely in the United States) of insurance companies judging pricing in a manner that is disproportionate and discriminatory towards minority neighbourhoods. The first example is this study in 1997 in Texas, where drivers in minority communities were frequently rejected or forced into higher cost, non-standard insurance plans. Other studies have been done that did show a justification for risk, where accident rates were higher in specific communities. This doesn’t mean that bias does or does not exist – but it does happen. So, to avoid it, is it better overall to just not use gender as a pricing point?

Home insurance in Ontario does not use age or gender (typically) to decide your insurance premiums. However, this is largely since no real difference exists between female homeowners and male homeowners in terms of claims, and fewer homes are only occupied by a single person, where some cars may only have a single driver.

Some provinces, especially those that are government-run (like in BC), have determined that gender cannot be used to set rates. The same is true of Manitoba and Saskatchewan – and even in New Brunswick and Newfoundland (where insurance is privately run.) Even some countries have done away entirely with gender-driven insurance pricing, with the European Union’s highest court creating a ruling that banned the insurance industry from charging different rates for men and women on life insurance, medical coverage, and, of course, auto insurance.

Will the same be true of Ontario? It’s tough to say for now, but with the current state of things, we could expect to see significant changes in the way that rates are priced – and gender may no longer be a component soon.

For more information on how your car insurance is priced, give Excalibur Insurance a call! You can also get a free, affordable car insurance quote with us by checking out our very own Rate Reducer.