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29th Mar 2024

EU court bans gender-based insurance prices

  • 'Boy racers' will be given an advantage, the Tories claim (Photo: Toni_V)

The EU's top court on Tuesday (1 March) ruled that basing insurance prices on the client's gender is discriminatory, a decision which is likely to make women pay more for their life and car accident policies.

"Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination," the court ruling reads.

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The insurance industry had so far benefited from an exemption to EU gender equality rules, allowing it to use separate statistics for men and women in determining the likelihood of a car accident or life expectancy. Consequently, women are currently paying lower premiums on their car and life insurance than men, because they are believed to be more cautious and live longer.

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

The case was brought to court by a Belgian consumer rights group, Test-Achats, who hailed the decision as "historic" and a "victory for men and women across the EU."

EU justice commissioner Viviane Reding, who is championing gender equality in the private sector and wants to have companies sign up to a pledge of boosting the number of women in their top management levels, also welcomed the ruling as "an important step towards putting the fundamental right of gender equality into practice."

It was a sign of "modernity," she argued, for insurance companies no longer to distinguish between men and women.

In Germany, the leading economics paper Financial Times Deutschland considers the decision "right and understandable", especially for "an industry which claims to be superior to public social systems," but has so far used discrimmination to generate profits.

But in the UK, home of gender-based ensurance companies such as Sheila's Wheels - "designed with women in mind" - the verdict has struck a nerve. Politicians from the ruling Conservative Party labelled it as "utter madness" and "a setback for common sense."

"Boy racers will now have even more money to buy unsafe fast cars, whilst safer drivers will be hit hard in their insurance premiums," Tory MEP Sajjad Karim said in a press statement.

The Association of British Insurers warned it could lead to an increase of up to 25 percent in premiums paid by women and a drop in retirement annuities paid to men.

A higher price volatility both in cars and life insurances is expected in the coming year until the market settles again.

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