January 21, 2011
The European Court of Justice has been asked to rule on the legality of the current derogation in EU law that allows insurers to take sex into account when determining insurance premiums and annuity payments for matters where sex is an established risk factor.
The question arose in a case brought by a Belgian consumer association. The Advocate General in the case concluded that the derogation was incompatible with legal principles of equal treatment, a decision which will now be examined by the European Court of Justice.
The European Insurance and Reinsurance Federation has warned that if the Court upholds the Advocate General’s decision, this could have an adverse effect on insurance costs and premiums for everyone. The whole basis of the insurance industry is that differences in treatment are justified on the basis of accurate statistics and risk assessments. If the industry is no longer allowed to calculate premiums in this way, it will inevitably have to spread out the costs of the added risk it will have to take on.
As well as insurance costs, the decision could also have a serious impact on pensions, with the current practice of providing men with greater annuity payments than women because they do not, on average, live as long, being brought into question.
At present, the Equality Act 2006 embodies the derogation in allowing gender discrepancies by insurance companies provided they are proportionate and based on accurate, transparent and up to date statistical data.
