The government has begun consulting on how insurers can use gender as a risk factor after a European Court of Justice ruling said providers could not charge different premiums to men and women because of their sex.

The consultation paper reiterates the government's legal interpretation that the judgment will apply to new contracts entered into after 21 December 2012 only.

It seeks views on this legal interpretation and the accompanying draft regulations.

The paper is also looking for comment on the government's impact assessment and requests additional data that would help it better understand the impact on consumers and insurers.

In March, the ECJ ruled that the use of gender as a risk factor by insurers should not result in individual differences in premiums and benefits for men and women, with effect from 21 December 2012.

Although the government continues to believe this judgment is detrimental for consumers, there is an obligation to implement it into law.

Mark Hoban, the financial secretary to the Treasury, said: "While nobody should ever be treated unfairly because of their gender, financial services providers should be allowed to make sensible decisions based on sound analysis of risk.

"We continue to work hard with other Member States and the Commission to secure legal certainty for industry and reduce any detrimental effects for consumers."

The consultation closes on 29 February 2012.

Downloads:

The consultation paper.

Ministerial Statement  outlining the government's interpretation