Insurance industry up in arms after equality ruling

THE cost of life, car and health insurance could rise for women but drop for men following a ruling by the European Court of Justice.

Any premiums calculated on the basis of a person’s gender must be scrapped by the middle of December next year, the court has ruled, saying they were against the principle of equality.

The insurance industry was up in arms about it yesterday and eurosceptic political groups criticised the decision, some describing it as “utter madness” and saying it would increase car insurance by 25% for women under the age of 26 and drop by just 10% for young men.

But the Belgian consumer group, Test-Achats, who took the case, said that in the countries where equal treatment has been applied by companies, costs did not increase.

Up to now, companies justified charging different prices to men and women on statistics that they said, for instance, show that women cause fewer and less costly traffic accidents while men collect pensions for less time because they live shorter lives.

Test-Achats say that while this might be true mathematically, it is false in reality. Men who avoid smoking or driving at high speed and live have a healthy lifestyle, live longer than their female counterparts, they said.

They point out also that the figures used by actuaries to calculate premiums rarely take more recent behaviour into account — such as the fact that more women are smoking and as a result their deaths from lung and other cancers are increasing.

“In fact, if we compare the life expectancy of women and men with similar lifestyles in relation to stress, physical inactivity, tobacco and alcohol, the gap in life expectancy is reduced significantly,” the group said.

Eight countries already apply unisex premiums for car insurance, including the Netherlands and Belgium. Test-Achats says that it did not result in an increase in premiums for car and health insurance and led to a reduction in life insurance premiums.

As a result of intense lobbying by the industry, member states insisted they could opt out from the need to treat the genders equally until a review due in December 2012. This was declared illegal and contrary to the EU’s charter of fundamental rights that came into force with the Lisbon Treaty.

Their decision comes 30 years after the US Supreme Court banned pensions premiums based on gender on the basis that it was against the Civil Rights Act.

The EU’s Justice Commissioner, Viviane Reding, described the court’s decision as “an important moment for gender equality”. All 27 countries allow insurers to use sex as a risk-rating factor while eight apply the same premiums for car insurance to men and women.

Ms Reding said she will examine the implications for the EU’s law not just for the insurance sector but also on equal access to goods and services for women and men, and she will meet industry representatives in the next few weeks.