· 2 min read · News

European gender ruling on insurance a 'step too far'


Today’s European court ruling preventing health insurance and life assurance providers from offering different rates for men and women is a step too far, experts in the industry have warned.


The European Court of Justice (ECJ) judgement means that insurers will no longer be able to charge different premiums to men and and women because of their gender. It will affect the cost of buying a pensions annuity as women live for longer than men and so receive a smaller annual pension for the same pot of money.

The pensions industry predicted that annuity rates would equalise for men and women, probably at levels higher than female rates but significantly worse than current annuity rates for men.

The National Association of Pension Funds (NAPF) said the ruling would lead to a worsening of people's pension incomes.

"While it is right that annuity providers should not arbitrarily differentiate between men and women, the data shows that there is a clear difference between them when it comes to longevity," said Darren Philp, director of policy at the NAPF.

"It is therefore perfectly reasonable for annuity providers to offer rates on the basis of this difference, as long as it is based on clear evidence."

Richard Fox, partner and head of employment law at Kingsley Napley, went a step further, saying the ECJ may have "gone too far with this one".

" Today's ruling does not reflect reality and is going to do nothing for sex equality. This latest judgment needs to be looked at long and hard to ensure it doesn't result in distortions and unfairness in the charging of premiums - females could suffer every bit as males. It seems it is due to apply to premiums and benefits from the end of the year so we haven't got long to sort it out," he said.

Fox added that, in the related field of age discrimination, the UK government had seen sense by introducing a specific exemption for employers of those over 65 in terms of their offering insurance backed health benefits such as life assurance and health insurance to their staff.

"It is obvious insurance companies need to charge more for those post a certain age. It was not doing the over 65s any service by pretending otherwise. It was also likely to lead to the withdrawal of benefits to the under 65s," he said.

While the vast majority of private medical insurers do not have different premiums for gender, the ruling will affect some who have used gender pricing in the past and so have older policies on the books, said Lindsey Joseph from the Association of Medical Insurance Intermediaries.

The court was ruling on a challenge by a Belgian consumer group Test-Achats. It argued 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.

The requirement for unisex insurance premium and benefits will start on 21 December 2012, giving governments and the European insurance industry time to adjust.