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EU Court delivers insurance gender ruling

Gender won't be taken into account for premiums

A file showing a pensions document

Insurers won’t be able to base premiums on the gender of policyholders, the European Court of Justice has ruled. Currently, gender can be taken into account providing insurers can justify this on the basis of risk analysis and claims statistics.

From December 2012, insurance providers will no longer be exempt from a wider EU principle covering gender equality. Until then, insurers can continue to charge men and women different premiums providing they can ‘ensure that the underlying actuarial and statistical data on which the calculations are based are reliable, regularly updated and available to the public’. 

Annuity income to change

Today’s ruling could see men or women paying more or less, depending on the product they are seeking to buy. Women tend to get a worse deal on pensions as they have a longer life expectancy. As a result of the ruling, their annuity income would rise, while it would fall for men. 

Car insurance premiums

The ruling will also affect car insurance. Presently, young male drivers pay more for car insurance as they are involved in more accidents and claims than young women. According to Steve Foulsham, technical services manager at the British Insurance Brokers’ Association, women drivers will lose out far more than male drivers will gain. 

He said: ‘Unisex rates will have to apply for motor insurance with the likelihood of an increase in premiums for females which could typically be up to 25% but in some cases more than 50%. However, it’s unlikely that premiums for male drivers will reduce much as their risk is still considerable.’

A disappointing ruling 

The Association of British Insurers, which represents the majority of insurance providers, has called the ruling ‘disappointing’. Its acting director general Maggie Craig said: ‘This gender ban is something the UK insurance industry has fought against for the last decade. The judgment ignores the fact that taking a person’s gender into account, where relevant to the risk, enables men and women alike to get a more accurate price for their insurance. Insurers will now study this judgment carefully to manage negative effects for customers.’

No immediate change in insurance premiums 

Which? chief executive Peter Vicary-Smith, said: ‘This ruling doesn’t come into effect until the end of 2012 so consumers shouldn’t see any immediate change to their insurance premiums. We’ll be keeping a close eye on insurers to make sure that they don’t use this as an excuse to raise prices across the board.’

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