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Gender pricing for insurance products will be banned from 31 December 2012, after the European Court of Justine ruled that risk assessments for insurance based on gender was discriminatory.
The decision means that female insurance premiums will increase while men are expected to pay less, despite the latter causing more accidents on the road.
The AA Insurance's director Simon Douglas said: "This comes at a time when many insurers are struggling with sharp rises in claims costs, which have already led to record premium increases over the past year.
"The use of gender in calculating insurance risk has been a fundamental principle of the UK's risk-based motor insurance structure for decades, although it has been a thorn in the EC's side since 2002.
"Following the court's judgement, I fear that many insurers will find the young driver market too risky and pull out altogether. That would reduce competition, leading to higher prices."
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