Brussels, 22/12/2011 (Agence Europe) - The European Commission has clarified its guidelines on unisex pricing for insurance premiums after the Court of Justice of the European Union ruled that different premiums for men and women constitute sexual discrimination. Exceptional risk calculation differences between men and women will still be allowed, however. EU Justice Commissioner Viviane Reding has taken the issue to heart: “When the Court of Justice issued its decision in the Test-Achats case on 1 March this year, I promised that the Commission would help insurers and consumers adapt to the ruling.”
Consumer watchdogs sets cat amongst the pigeons. The European Court of Justice was ruling on a case brought by Belgian consumer watchdog Test-Achats on 1 March 2011, which opened a veritable Pandora's box on gender issue in insurance pricing. Test-Achats took a case of sexual discrimination in insurance premiums to the Belgian constitutional court, which was referred to the European Court of Justice. It ruled that the insurance company exemption from EU Directive 2004/113/EC on equal treatment of men and women for accessing goods and services should not be allowed, and gave insurance companies a year to adjust their pricing policies in line with the Court ruling. The ruling will particularly affect practices in the United Kingdom.
Unisex pricing. Following consultations with national governments, insurers and consumers, the new Commission guidelines respond to the need for practical guidance on the implications of the ruling. They aim to benefit both consumers and insurance companies.
In addition, the guidelines provide examples of gender-related insurance practices which are compatible with the principle of unisex premiums and benefits, and therefore will not change because of the Test-Achats ruling. These practices are very diverse, ranging from the calculation of technical provisions to reinsurance pricing, medical underwriting or targeted marketing.
Recognising gender-specific risks. The guidelines cover a series of issues which emerged from in-depth consultations with member states and stakeholders. 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. The fact that a woman has a family history of breast cancer is allowed, for example, to affect insurance premium pricing for her, but not her brother.
Smooth transition. Insurance companies must change their calculation methods to introduce unisex pricing and adjust existing contracts up or down accordingly, but the Commission says that the insurance industry is perfectly capable and competitive enough to ensure a smooth repercussion and undue price hikes. Viviane Reding said: “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. I expect that insurers that move to a unisex tariff first will have a competitive advantage on the European market.”
EU Commissioner for the Internal Market and Services, Michel Barnier, said: “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.” (MD/transl.fl)