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EU Court calls for unisex premiums

Ruling is bad news for consumers, says federation head.

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Insurers in Europe won’t be able to use gender as a risk factor after December 21, 2012. The European Court of Justice (ECJ) decision–handed down  March 1–upholds an earlier EU directive that prohibits sex discrimination in insurance, and also cuts off an existing  loophole.

That loophole had allowed EU states to allow exemptions only if they make actuarial and statistical data behind their calculations public, and only if their state hadn’t adopted the unisex rule into legislation.

A Belgian court had asked the ECJ to determine whether that loophole conflicted with a 2004 EU directive granting men and women equal treatment.

The overall ruling is “bad news” for insurance consumers, according to the head of the CEA, the federation of European insurers and reinsurers, who said it will likely hit young women drivers the most.

“Insurers will consider this judgement carefully and will ensure that there is minimum disruption and impact for consumers,” Michaela Koller, director general of the CEA said in a March 1 statement.  “Nevertheless, Europe-wide the effect on the price and benefits and on the choice of insurance products for consumers could be significant.”

Insurer ire

Insurers in Europe will also face the extra costs of re-examining data, restructuring premiums and changing marketing materials in the face of the EU ruling, Koller said, noting that the transition for small and mid-sized insurers would be especially challenging.

The CEA will begin an immediate analysis of the judgement’s effects.

European insurers echoed the CEA’s response.

“The European Court’s judgement on gender as a factor in the calculation of insurance premiums and benefits flies in the face of common sense,” RSA responded in a statement March 1. “It is completely disadvantageous to the very people it was intended to protect and prevents insurers from using a legitimate rating factor”