Gender-based premiums 'unfair'

Insurance companies have been told by European judges that they cannot conduct risk assessments based on a person's gender.

The European Court of Justice in Luxembourg said that EU rules on equality are being breached if the differences between men and women are used as a risk factor in setting premiums forcar insurance, medical insurance and pension schemes.

From December 21, 2012, the ruling will apply, which means that insurance companies across Europe will no longer be able to base rates on differing road accident records or life expectancies between men and women.

Conservative MEP Sajjad Karim has already declared the verdict as "utter madness" and a "setback for common sense".

The Association of British Insurers estimates that the decision will actually reinforce price discrimination, with women drivers under 26 in the UK facing a 25% rise in car insurance rates, with a 10% drop in rates for men.

Until now, discrimination in setting insurance rates has been explicitly permitted under EU equal treatment rules, "if sex is a determining risk factor... substantiated by relevant and accurate actuarial and statistical data".

But the judges have followed advice from the court's Advocate-General that "higher-ranking" equality provisions set out in the Charter of Fundamental Rights of the Lisbon Treaty must now apply.

Insurance companies can carry on discriminating between the sexes until December next year - the time when current EU equality rules are due to be reviewed.

The delay will also give insurance companies and risk assessors time to change the template for risk assessment by ignoring traditional statistical gender-based evidence.

Copyright © Press Association 2011