The European Court of Justice in Luxembourg has ruled that using differences between men and women as a risk factor in setting premiums for car and medical insurance and pension schemes breaches EU rules on equality.
"Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination," the court said in a statement.
The verdict - which applies from December 21 2012 - will force changes in the current standard practice across Europe of basing insurance rates on statistics about differing life expectancies or road accident records of the sexes.
Women could face a jump of 25pc in car insurance premiums in light of the decision, while pension income form men could fall by between 5 and 10pc.
Men benefit from higher annuity rates as, statistically, they don't live as long as women. Currently men aged 65 get an income of £3,274 a year from a £50,000 pension fund, and women £2,993. In comparison, the unisex rate is £3,049 (certain types of pension already apply unisex rates)...
Matt Morris, senior policy adviser, at LifeSearch said: “This is a horrible mistake by the European Court. It is essential for insurers to use gender to calculate risk based on solid actuarial evidence and statistics. It is price differentiation, not discrimination, as it is not a decision that comes down to the whim of an individual. The consumer will now suffer. Prices will go up across the board as insurance companies try to build in the new risk.”..
Conservative MEP Sajjad Karim also condemned it as “utter madness” and a “setback for common sense”.
02 March 2011
Gender equality vs. actuarial statistics
The European Union Court of Justice doesn't think it's fair that women and men should be charged different rates...
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