INSURANCE PREMIUMS for women look set to rise significantly from next year following a ruling by Europe’s highest court prohibiting companies from using a person’s gender to determine prices.
Women will see life assurance and motor insurance policies climb, while pension payments for men are likely to increase.
Last October the European Court of Justice advocate general Juliane Kokott published a ruling arguing it was “legally inappropriate” to link insurance risks to a person’s gender. Yesterday the full court backed her decision.
“Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination,” the court said. A gender discrimination ban came into force at the end of 2007 but it allowed member states to continue to use current pricing models for five years “so long as they can ensure the underlying statistical data on which the calculations are based are reliable”. The court said yesterday that “the derogation from the general rule of unisex premiums and benefits is invalid with effect from December 21st, 2012”.
The decision will force a complete overhaul of the current practice across Europe of basing insurance rates on statistics about differing life expectancies or road accident records of the sexes.
The EU commissioner for justice Viviane Reding, who is responsible for gender equality, said it was “an important moment for gender equality in the European Union”. However, the ruling drew condemnation from the industry, which said differential pricing for men and women was legitimate given their different risk profiles.
“Europe-wide, the effect on the price and benefits and on the choice of insurance products for consumers could be significant,” the CEA, Europe’s insurance industry lobby, said in a statement.
The chief executive of the Irish Insurance Federation, Mike Kemp, agreed and said he was “disappointed” by the ruling.
He said women drivers benefited from discounted rates for motor insurance because of their better claims record, and paid lower rates for life assurance because of greater life expectancy than men.
He said that for the same reason, men got better rates for pension annuities. “Insurers have always priced risk objectively based on statistical evidence, and there is no reason why this process should be interfered with.
Fiona Deering, a director of online insurance brokers insuresave.ie, said: “This ruling is likely to be unfair for some people. It means that low-risk customers could pay more for their insurance needs even if they present a lower insurance risk to the insurer.”
She said she expected insurers “to use the ruling to their benefit; I would expect that prices for women will increase more than the prices for men will drop”.
Ciarán Phelan, chief executive of the Irish Brokers Association, said it was “likely that there will be a significant increase in premiums for women and a far less decrease in premiums for men”.
When it comes to car insurance men routinely pay more than women. This is particularly the case for men under 30 who can pay nearly 100 per cent more for motor insurance than their female counterparts.
Older men also pay more based on gender. A 35-year-old man who lives in the same area and drives the same car as a woman of the same age pays approximately 30 per cent more for a motor insurance policy, according Ms Deering.
The delay in implementation of the ruling until the end of 2012 will give insurance companies and risk assessors time to change the template for risk assessment by ignoring traditional statistical gender-based evidence.