Lords accuse gender ruling of "preventing true equality"

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Members of the House of Lords have criticised the European Court of Justice ruling on gender discrimination in insurance policies and annuities.

Lord Gordon of Strathblane has asked the government if it had “intervened” in the ECJ case.

The court nonetheless ruled on 1 March that the practice of using gender as a factor in the calculation of premiums and benefits must cease, with effect from 21 December 2012.

Speaking in the House of Lords on Tuesday, Baroness Verma said the UK government did make oral and written representations to the ECJ during the legal proceedings arguing that “rather than preventing true equality, the article in question ensured that different cases could be treated differently, thereby ensuring true equality”.

Lord Gordon responded: “The problem is that article 5.2 of the Gender Directive, as the minister indicated, allowed an opt-out where there was clear, up-to-date statistical evidence that gender was a major risk factor in insurance.

“That evidence still exists. It is a fact that women tend to live longer than men, yet an insurer is required by the court to ignore that in computing either insurance premiums or annuity rates. Does the minister agree that it is likely that all of us will be worse off, because a sensible and prudent insurer must provide for the worst-case scenario and cannot predict whether the uptake will be mainly male or female?”

Baroness Verma agreed that the government is “disappointed” by the ruling adding: “It is clearly undesirable to treat people unfairly because of their sex. However, financial services providers will be allowed a period in which to make the changes.

"We are encouraged that people have supported our drive for equality. Unfortunately, things such as this make our task much more difficult. I am pleased to say that the insurance industry has adopted a can-do attitude to this ruling, and I am sure that we will do our very best as a government to assist it.”

Lord Thomas of Gresford asked what measures the government can take to prevent the industry “profiteering”, noting that his step-daughter’s premiums have already gone up.

Baroness Verma replied: “We cannot dictate to insurance companies how they should make judgments on how their premiums should be costed. However, we are working closely with insurance companies and the financial services sector to ensure that they do not roll out unfair premiums on the back of this ruling.”

Lord Davies of Stamford then stated that “it is a pretty remarkable day when an insurance market is instructed to operate contrary to actuarial principles”.

Asked if a possible outcome is that customers look to companies in offshore jurisdictions to provide their insurance policies, Baroness Verma indicated that the rules will apply to all policies sold in the EU.

In response to a queston from Lord Peston about what more the government can do, Baroness Verma responded: “the government will continue, with other member states, to press to see what can be done, but I am afraid that there is no appeals process under the ruling.”

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