The health insurance and protection market covered
ECJ bans gender underwriting for protection and PMI
The European Court of Justice (ECJ) has outlawed the use of gender in underwriting from 21 December 2012.
The decision applies to all forms of insurance, including protection and private medical insurance (PMI), which the FSA predicts will be badly hit.
Industry representatives have been reluctant to speak out for fear being seen as lobbying judges, but the ruling will have a significant effect on protection and PMI pricing.
A statement from the ECJ said: "The Court rules that, in the insurance services sector, the derogation from the general rule of unisex premiums and benefits is invalid with effect from 21 December 2012."
It had been feared the ruling would be active immediately and retrospective to all currently in force policies, but this has not been realised.
Protection specialist adviser LifeSearch has condemmed the decision as a "horrible mistake" and suggested that all consumers will now lose out.
Matt Morris, senior policy adviser at LifeSearch, said: "This is a horrible mistake by the European Court.
"It is essential for insurers to use gender to calculate risk based on solid actuarial evidence and statistics. It is price differentiation, not discrimination, as it is not a decision that comes down to the whim of an individual.
"The consumer will now suffer. Prices will go up across the board as insurance companies try to build in the new risk. Women currently pay less than men for life insurance, whereas men pay less for income protection.
Morris continued: "It is very unlikely premiums will meet in the middle because there will be huge costs to the industry of re-pricing and updating their systems so everyone will end up paying the higher rate.
"Everyone loses," he added.
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Visitor Comment
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Get a grip folks
I can't understand why everybody is whinging so much. Is it just the ones who spend their time on this website or are people just looking for another excuse to bash the Europeans? This ruling isn't a surprise and we have quite a while to implement the change. Also, it does remove some of the unfairness - actuaries are not Gods and statistics can be (and are!) manipulated (remember Endowments). So come on you negative nells. Look at it as an opportunity to talk to our clients...think of all the potential opportunities (£££)
Posted by: Staying positive | Mar 01 2011
Idiots
So the overpaid 'judges' in their ivory tower have put yet more of a financial burden on women, generally the lower earners (as the pay gap is a long way from being closed) who now have to pay more for car insurance (obligatory) and life cover (more popular - and more affordable - than cic, IP etc). So (just) over 50% of the population, the ones who can least afford it, will have to pay more for essentials, great work ECJ, no doubt they'll get a pay rise, when millions of us won't this year, when they should be getting the sack...
Posted by: Marko | Mar 01 2011
Gender bonkers
Where will it end? This stupid ruling flies in the face of biological reality. It will cause chaos. It is one of those pieces of law that will result in untold unintended consequences. Costs will go up and it will open up the flood gates to other similar anti-discrimination cases, based on age, religion, race, disability and so on. The underwriting consequences will be highly unpredictable. If car insurance becomes cheaper for young men, more young men will drive; fewer young women will be able to afford to drive; the average claim cost will rise (because young men have more expensive accidents); there will be more injuries and deaths (because there will be more young male drivers on the road) and we are likely to see some insurers pulling out of the market for younger drivers altogether. More people will drive without insurance, or try to get away with being covered under a policy in their parents name. Some insurance companies will get the figures wrong and will not cope with the financial consequences. Sheila's Wheels must be having a pink fit! The annuity market is going to be totally non-plussed. There will be a risk of gender-selection against providers. Women will now be more likely to buy and annuity than men. Who knows how this will affect long-term cross-subsidy. All in all, this us a huge blunder.
Posted by: Nigel Bailey | Mar 01 2011
Cancel Surgery...
Oh well, I may as well cancel my operation then - I was only after cheaper life and car Insurance... May as well stay as I am and benefit from higher annuity rates when I get there... oh, have I opened up something there again for those European meddlers..!
Posted by: Jeff | Mar 01 2011
Hello Stranger
What? Another ridiculous situation from Brussels,I dont know them,they dont know my wife or my daughter. I know that I shouldnn't be paying the same premiums for car insurance as a person with impaired vision, or life isurance premiums the same as a person with a cancer history. Ratings are in place as a result of actuarial calculations over many years, if one party is deemed to be higher risk, they are expected to pay premiums to suit,not load the problem on to standard applicants-or have I got this wrong? Ask the great British electorate their view and what they think of these EU directives!
Posted by: frank roberts | Mar 01 2011
Lunacy
Whatever next? A 70 year old paying the same life cover premiums as a 20 year old? Someone with a pre-existing medical condition paying the same as someone in clean health? Time for the government to man up and tell the EU what to with their stupidity!
Posted by: Alex | Mar 01 2011
Madness
The wrong decision has been made as expected. Time for the Government to grow a backbone and do something about this.
Posted by: pete wildebeast | Mar 01 2011
Madness
Madness. What next? No age based underwriting due to discriminating against older clients? Gender is a medical factor in underwriting and like smoking or pre-existing conditions must be taken into account. More nonsense from the European courts.
Posted by: Alexander Reynolds | Mar 01 2011
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