ECJ bans gender underwriting for protection and PMI

clock • 1 min read

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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