Sex Discrimination Ruling on Insurance Companies
Mar 1, 2011
Women’s insurance premiums are due to increase by 2012...
The requirement for unisex insurance premium and benefits will start on 21st December 2012. This will give National Governments and the European insurance industry time to adjust.
The European Court of Justice has today agreed that insurance companies will no longer be able to take into account gender to decide how much of a risk customers are.
Belgian consumer group Test-Achats, challenged the court by arguing that a current exemption for insurers contradicted the wider European principle of gender equality.
"Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination," the ECJ said.
Due to this ruling, young men will eventually see their premiums decrease and young women are likely to have to pay extra.
Association of British Insurers
The Association of British Insurers (ABI) suggests that young women could face an average increase of 25%, rising to 50% for the least experienced.
Research published by the ABI at the end of last year highlighted the possible impact of removing gender from assessing risk:
- For motor insurance: women under the age of 25 could see an average rise of 25 per cent to their premium.
- For annuities: men approaching retirement could see an eight per cent reduction in annuity rates while rates for women approaching retirement could rise by six per cent.
- For life insurance: women could see a rise of as much as 20 per cent in the cost of cover, while men could see a fall of 10 per cent.
Currently, young women pay less as they are seen as safer drivers. Whereas, on the other hand, statistics show that young men in their late teens and early 20s are more likely to speed, to be involved in drink driving accidents, and to claim on their policies.
The ruling could affect the cost of pension annuities, life assurance and health cover as well.
The ABI argues that people get a deal which accurately reflects their situation.
"The facts show young male drivers are most at risk of accidents on the road, so young women currently pay a lower premium for their car insurance," explains Nick Starling of the ABI.
The gulf between men's and women's motor cover is particularly wide for drivers who have recently passed their tests.
The British Insurance Brokers' Association
The British Insurance Brokers' Association (BIBA) said currently the cost of the average car claim by an 18-year old man was £4,400, while that for an 18-year old woman was £2,700.
"The ruling will have a significant effect on the insurance industry which has used the system of risk based pricing to award discounts to lower risk drivers like young females who are statistically safer drivers," said Graeme Trudgill of BIBA.
"The industry will have to change its model and effectively females will now pay a cross subsidy for males on their insurance premiums."
Should women be treated differently when it comes to insurance?
Are you likely to be affected by this new ruling? What are your views on the European court’s decision?
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You can also take our LinkedIn poll by clicking here.
For further infomation about how this might affect you, then please visit the ABI's website here or alternatively you can view information on BIBA's website here.
