How do insurance companies set rates for gender “X” drivers?

This article has been updated from a previous version.

When Canadians shop for car insurance, the rates they’re given aren’t random— they’re based on a risk assessment. Insurers consider a combination of factors like age, driving history, type of car, and location, as these are statistically linked to accidents and claims. 

Gender has also traditionally been one of these rating variables. For example, young men under 25 often engage in riskier driving behaviors, increasing their likelihood of claims. As a result, gender impacts rates more for younger drivers —though this influence decreases with age, and not all insurers factor in gender.  

However, assessing drivers who don’t identify as male or female complicates the process. Without clear historical data for gender X, insurers often default to existing categories, either assigning the female rate or averaging male and female rates. In some provinces, gender isn’t a factor at all.  

This raises a broader question: should gender still play a role in auto insurance pricing? 

The introduction of “gender X” and the lack of data in insurance 

To reflect the diversity of Canadians’ identities, in 2017, the federal government introduced a “gender X” option on driver’s licenses. The goal was to provide “fair, ethical and equitable” treatment of non-binary and trans Canadians.  

But, as Kelly notes, insurance companies have been facing a practical obstacle when it comes to applying this new classification.  

“The problem with gender X is that we have no historical data on it,” she says.  

With only about one in 300 individuals currently identifying as gender X, the sample size is too small to generate reliable predictive models, and it’s going to take some years before there’s enough data to go by.  

As a result, many insurers default to existing categories, with some companies assigning gender X individuals the same risk level as female drivers in some cases, or using an average of male and female risk levels in others. Kelly adds that less than 30% of insurance companies offer gender X as an option, but since they aren’t required to disclose this, the actual number might be slightly off. 

Provincial differences 

Provincial governments in Canada decide which factors insurers can use to set car insurance rates, leading to differences across the country.  

Provinces with public auto insurance systems, like Manitoba, Saskatchewan, and British Columbia, don’t consider gender or age when pricing insurance. Instead, they focus on factors like the type of vehicle, driving record, and frequency of driving. Québec, which has a hybrid system, follows a similar approach. 

In provinces with private insurance markets, such as Ontario, gender is still used as a rating factor. However, some other provinces with private insurance, like New Brunswick and Newfoundland prohibit the use of gender and age as factors.  

Regulatory expectations changing in Ontario in 2026 

Regulatory changes are coming to Ontario in 2026, with the Financial Services Regulatory Authority (FSRA) requiring insurers to update their risk classification practices.  

“FSRA expects that insurers will put the interests of consumers first when determining their approach to rating by gender,” says Ashley Legassic, FSRA’s senior media relations and digital officer. In fact, insurers must update their auto insurance rating and risk classification systems for all vehicle types by January 1, 2026, to avoid rating misclassification. 

But while insurers are permitted to consider certain variables when determining premiums, says Legassic, the Insurance Act restricts others.  

 “Ontario’s Insurance Act dictates factors which cannot be used when determining risk classification,” she explains. “These include a driver’s income, employment history, or credit rating. FSRA’s role is to ensure agents and businesses that sell auto insurance comply with the Act.” 

Related: What to do if your insurance provider suddenly increases your rate? 

When it comes to auto insurance, should gender still even matter? 

The inclusion of gender in insurance pricing remains contentious. Critics argue it reinforces outdated binaries and discriminates against non-binary drivers.  

That being said, Kelly explains, “if a rating variable has some statistical power in predicting future claims, then it is not unfairly discriminatory.” After all, it’s based on individual history.    

She explains that while insurers avoid factors protected under the Charter of Rights — such as race, religion, or nationality — they are allowed to use predictive variables. Particularly ones like age and gender, which are easily verifiable. 

“If a variable is predictive and they have the right to use it, they would prefer to use it because they get better pricing [measures],” she says.  

While advancing technology could one day make gender less relevant, the insurance industry on a large scale is not yet ready to move away from traditional predictive variables. That being said, there are options like usage-based insurance (UBI) and telematics. These technologies, which are currently in practice, offer a more individualized and meaningful way to measure risk, even though they are not yet the industry standard.  

“Studies have shown… that once you allow for these telematics, then the explanatory power of gender is greatly reduced,” Kelly says.  

Learn more: How insurance companies make money 

Moving forward 

For now, Kelly advises gender X drivers — and really, everyone — to be proactive when shopping for coverage.  

It’s important to ask questions like: how is my rate being set? What options are available? What can I do to improve my rate? Could switching deductibles or commuting less reduce premiums? 

“Your gender, your identity, is just one element you need to talk about,” Kelly stresses. She encourages starting an open conversation with insurance brokers or agents.  

Legassic echoes this sentiment, calling out the importance of shopping around for auto insurance. According to her, the price you pay depends on several factors, including: 

• How long you’ve been licensed 
• How many years you’ve been accident-free 
• The type of vehicle you drive 
• Your location 

“By shopping around, you may be able to find a lower rate,” Legassic advises, adding that companies charge the same price for the same benefits.  

Insurers also adjust their rates over time. This means that the company that had the best rates and coverage options last year may not be the company that provides the best value for you today. And until insurers gather enough data to treat gender X as a credible rating variable, transparency and persistence remain the best tools for drivers navigating this evolving landscape. 

Read next: How much auto insurance do you need in Canada?