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European Court of Justice (ECJ) Gender Directive for Insurance

Published: 11th March 2011 00:21
The European Court of Justice (ECJ) has ruled that insurers cannot price on gender.   In other words, even though men are statistically higher risk for products such as car insurance and life insurance, the ECJ has ruled that it is discriminating against men for their premiums to be higher just because they are male.

(Written by Paul Flintoft - Director of Money Minds Ltd)

The result of the ruling will mean that insurers cannot price products based on gender from 21st December 2012 and will therefore have to radically change the way they price annuities, life insurance, and health insurance.

Car insurance premiums for women, especially under 40, could rocket as they currently pay less than men as they make fewer and lower value claims.  The Association of British Insurers (ABI) says women under 25 could pay 25% more for car insurance and added that all women could see a rise of up to 20% for life insurance.

Who Came Up With The Gender Directive Hare-Brained Idea?

I would imagine it would be a group of bureaucratic buffoons with nothing better and more valuable to do with their time.  Statistically, if men die younger or have more accidents than women of the same age, they should pay higher insurance premiums.  Premiums are based retrospectively on risk.

If the day comes when the risk is similar, then insurance premiums should be similar.  It really is that simple.

The result of this ruling will almost certainly be higher premiums overall for everyone. 

Insurance premiums for women will certainly rise (to balance out ‘gender unfairness') but it's unlikely premiums for men will come down by a proportionate amount because there will be huge costs to the industry of re-pricing and updating systems.

Conclusion

This ruling stinks of political bureaucratic bullsh*t.  It's simply an excuse to raise premiums and profits for insurance companies.

What Can I Do?

Now the ruling has been made, my advice (especially if you're female) is to review your insurance contracts ASAP before the ruling starts to impact premiums.  This would certainly apply to life insurance and to a lesser extent health insurance and income protection insurance.

The ruling won't have full impact for over 18 months, though it's likely that insurers pricing models will start to move before the deadline date for compliance reasons.  Act Quick!

© 2011 Paul S Flintoft

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