HOW THE INSURANCE RULING COULD AFFECT YOU

Q.WHAT IS THE RULING?
A.The European Court of Justice (ECJ) has ruled that insurance companies cannot charge different premiums to men and women based on their gender. It also bans use of actuarial factors to calculate men’s and women’s pension contributions.

Q.WHY HAS IT HAPPENED?
A.The ruling amends the Gender Directive, which came into effect in 2004 but allowed insurers to continue to use gender in risk profiling. A Belgian consumer group, Test-Achats, challenged the exemption and the ECJ upheld the challenge, saying: “Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination.”

Q.WHICH PRODUCTS WILL BE AFFECTED?
A.The ruling will affect car, life and medical insurance premiums and annual annuity payments to men and women. Insurers use statistical differences between men and women such as frequency and seriousness of car accidents and life expectancy to calculate premiums. It means women pay up to half the car insurance premiums of men, but receive lower annuity payments.

Q.WHEN DOES IT START?
A.All policies must be non-discriminatory from 21 December 2012.

Q.HOW MAY PREMIUMS CHANGE?
A.Women are expected to have to pay 25-50 per cent higher insurance premiums while men pay slightly less. Men approaching retirement could lose about eight per cent of their annuity rate while women’s rates could rise by six per cent, the ABI said. Women’s life premiums could rise by a fifth while men could pay ten per cent less. Insurance firms may also start to look at different ways to calculate premiums, such as using in-car devices that monitor when and how you drive, or pay-as-you-drive schemes that charge you by distance driven. Pension benefits will be repriced and tax credits and tax-free lump sums will be recalculated.