‘Triumph of equality over fairness’ as women drivers stung

THE insurance industry has predicted insurance costs will rise for female motorists and male pension policies following a landmark ruling by the European Court of Justice that setting insurance prices on the basis of gender is discriminatory.

Insurers have warned that overall costs of both motor and life insurance products will almost inevitably rise from December 21, 2012, when current derogations under EU legislation allowing insurers to discriminate on grounds of sex expire.

The Irish Insurance Federation said the ruling would prevent insurance companies from differentiating between sexes in pricing motor insurance and life assurance products, despite statistics showing that men and women present different risks.

IIF chief executive Mike Kemp expressed disappointment at the ECJ judgment and stressed that there was no reason why insurers should be prevented from pricing risk on an objective basis.

“Insurers do not discriminate against anyone but differentiate where experience justifies it to ensure fair and accurate pricing of risk for all customers,” said Mr Kemp.

The IIF has predicted that the ruling removing the ability of insurers to take gender into account will ultimately have negative consequences for consumers.

AA Insurance director John Farrell described the ruling as “a triumph of equality over fairness”.

Mr Farrell said it would result in the systematic overcharging of young female motorists in order to subsidise male drivers. He also observed that some insurers would pull out of providing insurance cover to young motorists because it was just too risky.

The Society of Actuaries in Ireland also insisted that the EU court’s decision would have profound implications for the insurance and pension industries.

The SAI claimed that there was a significant amount of statistical evidence to demonstrate that there are marked gender differences in mortality, sickness and motor accidents between males and females.

It maintained that differentiation in pricing insurance policies based on differences between males and females did not constitute discrimination. “These differences are a key factor in the accurate pricing and efficient operation of the insurance industry and the pension industry.”

It warned that insurers in future will have to take into account the issue of moral hazard as people in high-risk categories may buy more insurance, while those at a lower risk will buy less or none.

The society also predicted that some insurers might restrict the range of products or even withdraw from the market in future.

On annuities, the society said the ECJ ruling could result in a reduction in annual benefits for men as well as little or no reduction in costs for women.

“Overall, unisex insurance pricing is likely to result in higher prices and less choice for the consumer,” said the SAI.

However, the EU Justice Commissioner Viviane Reding said the ruling by the Luxembourg-based court represented “an important moment for gender equality in the European Union”.

“It is now clear that an insurance company must not distinguish between women and men; all customers must be treated equally.

“This is a matter of respect for fundamental rights. It is now also becoming a matter of good business practice,” said Ms Reding.