Gender considerations should not be used to set insurance premiums or benefits
As many of our clients will already know, there has been an important decision in the past week or so. Its impact has, however, not been fully appreciated by many.
In Association Belge des Consommateurs Test-Achats ASBL and ors the European Court of Justice has held that insurers cannot take gender into account as a risk factor when setting premiums and payouts in respect of annuities, retirement savings and accident cover. The press have focused on car insurance, but the decision is likely to affect many insured benefits provided by employers such as life assurance and private medical cover. While it may well lead to a substantial increase in the level of pensions paid to women, the pension contributions and insurance premiums payable by both men and women may increase substantially.
The ECJ considered that using 'the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination' contrary to Article 4(1) and 5(1) of EU Directive 2004/113/EC implementing the principle of equal treatment between men and women in the access to and supply of goods and services. A provision within that Directive permitting actuarial factors based on gender to be used for setting proportionate differences in the premiums payable by the different sexes was ruled to be invalid as from December 21 2012. Consequently, a rule providing for unisex premiums and benefits will come into effect from that date. The transitional period between now and then will allow EU member states to decide what action to take on domestic laws and give companies a chance to adjust and find ways to mitigate the potentially very substantial knock-on effects.
As this information has been prepared by Maitland Walker LLP as a general guide, we recommend you seek specific professional advice before acting on any information contained within it. No liability can be accepted by Maitland Walker LLP for any action taken or not taken as a result of this information.