While the British government dithers and
discusses the ban on gender rating of insurance, with an insurance industry
that is mostly dragging its heels and complaining about Europe upsetting its comfort
zone, the European Commission has published guidance to Europe's insurance
industry to ensure non-discrimination between women and men in insurance
premiums.
The European Commission guidelines are to help
the insurance industry implement unisex pricing, after the Court of Justice of
the European Union ruled that different premiums for men and women constitute
sex discrimination.
In its ruling on the Test-Achats case on 1 March
2011, the Court of Justice gave insurers until 21 December 2012 to treat individual
male and female customers equally in terms of insurance premiums and benefits.
Following consultations with national
governments, insurers and consumers, the new guidelines respond to the need for
practical guidance on the implications of the ruling. They aim to benefit both
consumers and insurance companies.
EU Justice Commissioner Viviane Reding says,” By
adopting these guidelines a full year ahead of the deadline to comply with the
court's ruling, we have lived up to our commitment. It is now up to the
insurance industry to ensure that there is a smooth transition to fully equal
treatment of men and women in insurance. We will remain vigilant in how the
industry implements the court's ruling. I expect that insurers that move to a
unisex tariff first will have a competitive advantage."
EU Commissioner Michel Barnier adds: "There
have been some concerns among insurers as to the impact and consequences of
this important judgment, in particular at this time when insurers as all other
financial market participants face important challenges. I believe that these
guidelines will be helpful for the industry and assist them in adapting their
contracts and premiums to be able to ensure timely and full compliance with the
judgment. This will be beneficial for both the industry and
policyholders."
The guidelines cover a series of issues that
emerged from in-depth consultations. For example, they clarify that the ruling
applies only to new contracts, in particular to contracts concluded as from 21
December 2012. They also give specific examples of what is considered a new
contract to ensure a comprehensive application of the unisex rule at EU level
from the same date.
In addition, the guidelines provide examples of
gender-related insurance practices that are compatible with the principle of
unisex premiums and benefits, and therefore will not change because of the
Test-Achats ruling. These practices include medical underwriting and targeted
marketing.
Gender is a determining risk-rating factor for
life insurance and private health insurance. It is likely that a transition
towards unisex pricing will have consequences on premiums and/or benefits at
the individual level for men and women. Depending on the product concerned,
premiums might increase or decrease for certain categories of consumers.
The insurance industry is competitive and
innovative. It should be in a position to make these adjustments and offer
attractive unisex products to consumers without unjustified impact on the
overall price level. Price reductions resulting from unisex pricing should be
passed on to consumers with the same level of fairness as price increases.
It is worth remembering that according to the
original law, agreed by all EU states including the UK, was that by 21 December
2007 the use of sex as a factor in the calculation of premiums and benefits for
the purpose of insurance and related financial services shall not result in
differences in individuals' premiums and benefits. Insurers used a technicality
to take no action on this, and really have nobody but themselves to blame if
they are not ready for gender equality.
