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European gender ruling: what it means to you

(Update) Politicians and insurance experts have attacked a ruling from the European Court of Justice which prevents insurers treating men and women differently when assessing risk. The decision has huge implications for pensions, life cover and car insurance.

European gender ruling: what it means to you

Politicians and insurance experts have attacked a ruling from the European Court of Justice which prevents insurers treating men and women differently when assessing risk. The decision has huge implications for pensions, life cover and car insurance.

What's happened?

European judges have banned insurance companies from assessing risk based on gender, in a move that turns the pricing of annuities, motor insurance and life and medical cover upside down.

It has been standard practice for many years for insurers to set rates in these areas according to proven statistical differences between men and women.

Generally, women live longer than men and as drivers have fewer road accidents. This means they get better car insurance rates than men but lower annuity rates when they convert their pension savings into a retirement income.

However, the European Court of Justice in Luxembourg ruled today that using behavioural differences between men and women when setting premiums breached 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.

Big impact on policies

Research for the Association of British Insurers shows women under 25 could see their car insurance premiums leap by 25% on average. Men may pay slightly less than they do now, according to Kely Ostler-Coyle, an ABI spokeswoman, but premiums are ‘going to have to balance out upwards, rather than downwards.’

In pensions women could benefit from a 6% rise in annuity rates though men could suffer an 8% fall, reducing their retirement income.

Similarly, life insurance for women could soar by 20% while men could see a fall of 10%.

However, there is great uncertainty as to what will actually happen. The ruling is not due to take effect from 21 December, 2012. There are fears that insurers will exploit the confusion to push up their margins. They will also face one-off costs changing their systems in light of the ruling.

Maggie Craig, ABI acting director general, said: ‘This gender ban is disappointing news for UK consumers and something the UK insurance industry has fought against for the last decade. The judgment ignores the fact that taking a person’s gender into account, where relevant to the risk, enables men and women alike to get a more accurate price for their insurance.’

(Not sure what an annuity is? Read our introductory guide)

What the experts say

Darren Philp, director of policy at the National Association of Pension Funds, said the ruling would lead to a fall in pension incomes. ‘While it is right that annuity providers should not arbitrarily differentiate between men and women, the data shows that there is a clear difference between them when it comes to longevity [life expectancy],’ Philp said.

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52 comments so far. Why not have your say?

Sooz Blooz

Mar 01, 2011 at 11:25

It is utter madness and typical of the Europe Court. Don't insurance companies base premium pricing on detailed analysis of previous claims?? If male drivers have more or larger claims than female drivers, it is common sense that they pay higher premiums. Just as females (who statistically live longer) get smaller annuities when they come to retire.

Meddling by Europe just puts costs up for everyone.

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sam chambers

Mar 01, 2011 at 12:00

The insurance industry has plenty of time to adjust their policies. Yes insurance is based on risk and women are potentially lower risk then men which should show up to some extent in claims history. I can see that insurance companies may ask for 7 or even 10 years history and those with claims will see a disproportionate increase in premiums compared to those with none. In some ways i can see where the courts are coming from. My premiums based on the same car and with the same claims history as my wife are 18% higher yet historically I am not higher risk. The Insurance industry is exceptionally competative so I am sure the consumer will not see the changes banded about in the press

I am more worried though by the annuity ruling but again they may be ways the insurers can mitiage the changes

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Simon Pym

Mar 01, 2011 at 12:02

This decision by the ECJ is confirmation that sanity has totally capitulated to so called Political Correctness.. How long will it be before it will not be permissible to use height, weight and blood pressure when determining life assurance premium rates?

Oh, and while we're at it, we better ignore a history of breast or ovarian cancer as a potential life insurance risk. That's got to be against gender equality. Then again, I suppose prostate cancer shouldn't count either.

Gawd help us.

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Matthew Robinson

Mar 01, 2011 at 12:46

It's political correctness gone mad!

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Alex Cummings

Mar 01, 2011 at 13:15

I am 23 years old and male. As such it costs more to insure my car than it did to actually buy it. Surely it is also discriminatory to base my premium on my age, based on this European logic??

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Long Gone Expat

Mar 01, 2011 at 14:12

I suppose next will be bookmakers have to price every bet at the same odds?

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Mar 01, 2011 at 14:21

Bizarre meddling- don't these people know anything about risk assessment?

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Donald Chan

Mar 01, 2011 at 14:27

This is an outrageous interference in our judicial system and our commercial practice. English law and insurance have been utilised throughout the world and in both areas we have created an important export business.

Insurance is a commercial transaction based upon risk. Insurers assess risk and ‘underwrite’, that is they apply discriminating premiums in order to make a profit whist at the same competing with their rivals for business. The essence of underwriting is discrimination.

This ruling undermines the way our companies have the freedom to write business in the way they think fit.

What particularly annoys me is the way the Association of British Insurers (and presumably their member companies) has ostensibly acquiesced rather than making any strong argument to counter this socialist measure. Is no-one prepared to stand up to this ideology?

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Mar 01, 2011 at 14:39

This ruling would seem to challenge the whole basis of evidence based pricing for insurance risk. It is yet another example of bureaucrats attempting to design a world which does not relate to the real world. Time after time Governments seems to stand by whilst unelected individuals inflict their views on a powerless electorate. How are decisions like this going to get more people taking an interest in the political process. Most people have given up in the face of the stream of totally illogical 'judicial' decisions.

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Barrie Davies

Mar 01, 2011 at 14:41

The insurance industry is about risk. Premiums are set according to risk assessed by actuaries.This ruling is a complete nonsense as many other dictats by the EU are.The UK should be in Europe but not ruled by it.Utter madness!!!

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Dave Kempton

Mar 01, 2011 at 14:44

A ridiculous decision but do we expect anything else from Europe? As it was, everything was based on expectation of cost to the companies i.e. risk.

It made sense to pay men more for an annuity because they live about five years less than women. It also made sense to charge young men more for their car insurance because they are inherently more likely to be more immature, reckless and irresponsible then young women. Statistics bear this out and the biggest risk group is a male netween 18 and 24 years of age. I know they like to think that they are fantastic drivers and it is the 70 year olds that are dangerous but it just isn't true.

What are the Europeans going to do next charge the same for life insurance for a 90 year old as they do a 19 year old?

Are the European courts incapapble of making sensible decisions?

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Sukhbeer Cheema

Mar 01, 2011 at 14:49

It is intelligent and practically correct decision making.

Why should someone be charged more from the start simply because of their sex?

Some female drivers are hardly competent anyway from my experience and their accident rates are increasing in the younger group anyway to nearly the boy racer level from what I have read?

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Mar 01, 2011 at 14:50

" Europe but not run by Europe."

William Hague

Sounds a very hollow slogan now, doesn't it?

"In Europe and dictated to and regulated to the nth degree by Europe," would seem to be a more accurate description. Let's just leave the EU. Who's going to miss this kind of idiotic nonsense?

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Ben Alexander

Mar 01, 2011 at 15:02

Barrie Davies- We should be in Europe, but not ruled by it. Talk about having your cake and eating it. Your either in, or your out. Not both.

This has some good points. It shows the insurance companies for what they really are. i.e. money grabers taking advantage of compulsary insurance laws.

The Australian system works well, the yearly registration of the vehicle covers tax and covers the vehicle through third party only. If the driver wants fully comp, they buy it through a private insurance company. It lowers the amount of uninsured cars and does not discriminate. They also make new drivers have P plates for two years, limit the engine size they are allowed, and you are not permitted to drive without being accompanied by an experienced driver after 10pm.

Worked a treat when I lived there. No need to keep renewing insurance, all in one payment, and because it is controlled by the government, the public have a say in it.

ah, democracy, it does still exist in some places.

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derek farman

Mar 01, 2011 at 15:05

I don't think these Euro morons have thought this through . Now those who have their insurance premiums increased or annuities reduced due to their sex rather than their statistical experience will have a reasonable case to say that they are now being discriminated against and therefore their human rights have been compromised .

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Tony Winter

Mar 01, 2011 at 15:30

What about age discrimination and car insurance. I am 64 but current practice is for insurers to increase premiums when in your 70's and above. I shall be happy if the EU steps in but it would be illogical as I am sure drivers over 80 do have more accidents (but usually low speed ones that just damage the car not people) and I am sure there are statistics to prove it.

What next, discrimination on intelligence when recruiting high power staff?

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Mar 01, 2011 at 15:39

Insurance rates are based on objective reality, these morons do not recogonise facts so why should anyone be surprised. If our government does not withdraw from the jurisdiction of this Court perhaps we should prepare to fight for our freedom like the Libyans.

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Mar 01, 2011 at 15:41

Insanity. The next logical decision is that they decree that men will live as long as women (or that a particular age to achieve equality -Harman take note- woman shall die) and that men are able to bear children and it happens and that men's higher heart problems are sexist and immediately cured. Because they say so woman are immediatel made as strong as men, physically, and the list goes on. It ignores fact of millenia.

I think thank a few phsyciatrists need to visit Strassburg (?) and apply sanity and reality tests. On this ruling alone they would fail, miserably.

Might as well rule that earthquakes, hurricanes, floods, drought, famine, failed crops landslides, tsunamis etc are banned and the world has a benign equal climat from pole to pole and that manna falls from the sky on a daily basis. Will not change anything.

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From Teignmouth

Mar 01, 2011 at 15:42

To what other European countries does this ruling apply and how many of them are affected by it and how many of those which are affected by it will actually take any notice of it?

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paul wenham

Mar 01, 2011 at 16:29

Presumably the Eurocrats will soon decree that men should also carry babies so that we can have real equality. What a load of tosh!

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derek farman

Mar 01, 2011 at 16:35

Ben alexander .... Wow , the Australian system sounds really sensible . What a shame we can't emulate other countries when they have a better way of doing things than us .

The Australian car insurance system , and the way they treat inexperienced drivers , we would do well to adopt . But we can't because our hands are Eurotied .

But it beats me how it is that the French enjoy perfect roads and health system when we struggle with what seem insurmountable problems with ours . Perhaps they have found a way to work within the system to get just what they want .

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Mar 01, 2011 at 17:01

Isn't there an easy way around this? Set up two separate companies, one only dealing with men and one only dealing with women (e.g. Sheila's Wheels). That way, each company can charge whatever is the right amount.

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Mar 01, 2011 at 17:04

If you take the court's logic one step further - let's abolish age discrimination. 18-year olds should get the same car insurance as 40 year olds. Sounds completely crazy? Exactly.

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Ben Alexander

Mar 01, 2011 at 17:05

derek farman

I'm sure we could adopt some of there systems, i.e. P plates, engine size, driving times etc...i don't think this would contravene any EU laws. It could upset a lot of insurance companies though, not that this is a bad thing.

As for the French, say what you like about them, They look after their country and the services it offers, they don't stand for being ripped off, even by their own government. We just talk about how much we love our country, and then go on to abuse it and milk the system for as much as possible, as do our MP's.

UK Insurance companies have a crazy level of risk assesement, they even believe that being married makes you a safer driver, funny, i thought it might have the opposite effect :) They want to know where you work, your job title, i even got asked for my place of birth. All these questions just to increase the chance of charging a higher premium.

Only the UK would allow its residents to be ripped off by the corporations, normally foreign ones at that.

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Donald Chan

Mar 01, 2011 at 17:11

Curious: you're not paying attention, are you?

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Charles Polak

Mar 01, 2011 at 17:12

The comment from "Curious" makes sense but I am sure someone would find it discriminating to limit customers to only one sex.

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Keith Hilton

Mar 01, 2011 at 17:13

If Ros is correct in stating that "Currently, men buy around eight out of every ten annuities sold in the UK ...", then given current rates for 65 y.o. of £6860(M) & £6520(F), then the average required to provide pensions of the same vale for both men & women is £6792 i.e. only a 1% reduction on the nams pension.

Also, as men earn on average, more than women, it would be expected that their pension funds are relatively larger, so this should further reduce the difference to current rates i.e. < 1%.

Am I missing something, or are suggestions of 5% - 10% reductions of mens pensions scaremongering? Maybe that figure includes the blatant profiteering expected from the pension providers!

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cat in the crypt

Mar 01, 2011 at 17:17

me is gunna apply fur job as brane sugeon an soo em when they say i aint clever enuff - they carnt discimwhat again me like that

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Donald Chan

Mar 01, 2011 at 17:18

Charles Polak: you're not p[aying attention either.

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Mar 01, 2011 at 17:25

Re. pensions:- know-nothing, arrogant judges flying in the face of actuarial evidence. Puts me in mind of the judge in the thalidomide case who ignored actuarial advice because he knew best. Unclear why we don't tell the court to take hike - what in practice could they actually?

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John van der Mark

Mar 01, 2011 at 17:47

The pension experts reckon as a man at retirement, I will lose up to 10% on my pension annuity, but women will get an increase.

Seriously, and for fanncial reasons, I am now in the process of planning and a sex change.

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Samantha Vickers

Mar 01, 2011 at 18:41

I think that there are quite a few problems with this ruling and the worst relates to pensions and annuities. I saw it put well in a blog post earlier.

"I have argued before that we have a problem with long-term contracts and this ruling highlights the problem yet again. If we put to one side whether the ruling is correct look at what it does. There will be men about to retire who will receive a lower level of income from a pension annuity but that annuity could have been built up over 30/40 years on a set of rules and expectations that have now been changed as a result of this decision. There will be corresponding gains for some women. So much for trust and reliance in a system."

How has this been allowed to happen?

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Donald Chan

Mar 01, 2011 at 18:49

Samantha's point need careful attention. Watch developments carefully.

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Mar 01, 2011 at 18:54

Samantha - I think the quote you provide is an excellent example of the consequences of this misguided decision. There appears to be a complete disconnect between politicians - who claim to want to restore their credibility with the electorate - and their apparent impotence to do anything at all about decisions such as these affecting the populace. Why would anyone with an ounce of common sense wish to align themselves with these ludicrous judgements.

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Anton Neumann

Mar 01, 2011 at 19:06

I have sympathy with Samatha's point. In my case my wife has already retired and therefore will not benefit from the changes while I am yet to retire and will lose out from them. So a double whammy! But on the rest, it does feel like a lot of hot air. Car insurers can easily obtain and verify 'micro' information on drivers which would give them a clearer picture of risk. ie number of speeding fines, parking ticket, average weekly alcohol consumption, number of miles driven, service of history of car etc. I am sure there is other information they can collect which would help them judge whether an individual, male or female, is a good or bad risk rather than just assuming that male drivers are always a worst risk than female drivers.

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Charles Polak

Mar 01, 2011 at 19:11

Donald Chan...Stop being cryptic and allow Curious and myself our human right to be inattentive!

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Donald Chan

Mar 01, 2011 at 19:39

Sorry. I keep telling my kids to pay attention.

Hesi, there is a disconnect between poltiicians (ours, anyway) and the European Court.

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peter drew

Mar 01, 2011 at 19:47

So there really is a difference but let's ignore it.

Equal rights, equal opportunities are pretty cool.

This is neither.

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John van der Mark

Mar 01, 2011 at 20:53

I have a GAR (Garanteed Annuity Rate), and just wonder how that's going to be affected?

Still ... I'll have my old age pension of a 100 quid a week, plus a Bus Pass to the town centre to spend it all on old wine, matured women and cigars.

Shucks! Just dreaming...

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Mark Mercer

Mar 01, 2011 at 20:55

Yup! The world has gone mad.

The EU judges are merely applying the law - it's the stupid law that wants fixing. It is a long time since I found I could not have a female secretary without advertising for and interviewing any male that turned up wasting his time. Men and women are actually different! It is nonsense to deny it.

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Trevor Martin Dickinson

Mar 01, 2011 at 21:38

Come on, Cameron, show some balls and stand up to this court. Trouble is, no politician of the three main parties wants to fall out with Europe since it is somewhere to run, with an even more generous expenses system, when he/she is kicked out here.

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Mar 01, 2011 at 22:09

When is the referendum?

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Mar 02, 2011 at 09:10

The usual outrage from the usual Morons. Why should all men have to pay higher insurance premiums just because some idiots drive worse than young women?

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Donald Chan

Mar 02, 2011 at 10:15

Some interesting comments on risk, insurance, commercial freedom andt the European Court. Thank you Christopher for your insightful contribution. ('Derrr' is the apprpriate vernacular, I think).

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Mar 02, 2011 at 10:22

Christopher - Describing those who take a different view from that which you hold as a 'morons' is hardly likely to persuade them to your point of view.

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Mar 02, 2011 at 12:05

Sukhbeer Cheema

The only supporter do far and I wonder if you understand risk assessment? You also state:

"Some female drivers are hardly competent anyway from my experience and their accident rates are increasing in the younger group anyway to nearly the boy racer level from what I have read?"

If this is correct then there would be no difference in the cost of insurance between the sexes. so this argument is irrelevant to the discussion.

Insurers should be allowed to take into account ALL factors which reasonably help to establish the risk. Or will you be happy to pay twice as much for travel insurance so that elderly people pay no more than you?

Perhaps the answer is to obtain insurance and annuities from offshore companies?

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George Woodhouse

Mar 02, 2011 at 14:29

The real point here is that the EU government is an unelected, bureaurcratic monstrosity. It's decision makers are far to distant from the electorate to get involved in such detailed minutiae of our lives. And as usual it gets it so wrong - and 100% of the population as well as 100% of our MPs could be against it and it would change nothing. Is this what democracy is called?

We need a real constitution for the EU, debated and discussed and with opinions expressed by everyone with an interest, no more than 10 pages long, and placing limits on the EU government's powers BEFORE it is then put to the elctorate for a referendum.

Only then they would have some credibility for their decisions.

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Mar 03, 2011 at 09:19

Excuse me, George, but did we not oppose an elected European parliament? Did we not oppose as much of the proposed constitution as possible for as long as possible? I am not sure that the British people actually want to put their minds to making the EU work. Our politicians are pretty chauvinistic and narrow minded on this subject too, except the LDs. Did we not take the opportunity to send the least powerful and known figure possible to be our new European Foreign Minister. Do we not avoid sending top civil servants to the Commission. Do we not chose failed politicians like Neil Kinnock to be our representatives, rather than the best of our rising people.

If we are to acheive what Mr Woodhouse proposes we need some courage from our leaders and more imagination from our media.

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Mar 03, 2011 at 09:21

Oh yes Hesi - you are quite right, but you may agree that some of the earlier blogs seem to come from below the neck rather than above it.

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derek farman

Mar 03, 2011 at 09:39

Well folks .... maybe you might remember that the EU spent 3 years debating the allowable noise levels from garden lawn mowers ! Enough said I think !

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George Woodhouse

Mar 03, 2011 at 11:47

Christopher - you are right that many people opposed the idea of an elected EU parliament and the constitution. This beacuae neither were set up as [part of a democratic process in which we call all express an opinion. They were foisted on us by the EU bureaucrats. Theoretically our UK parliament "debated" both projects, but not a single word was changed during the so called debates. It was not possible because of the constraints of the EU governing system whereby it is either all or nothing. This of cousre applies to all the thousands of regs coming our of the EU.

As an international businessman for many years, I am broadly in favour of an EU co-op of some sort, but without major democratic reform and, therefore, credentials it will always be vulnerable to collapse because it has the support of a minority.

Politicians, of course, love it, for many reasons. It can be submersively blamed for many of the restrictions placed on our lives, but mainly it is used as a retirement home/enormous pension pot for many useless politicians - Mandy, Kinnock etc. And I still expcet Blair to end up as President eventually.

We need to start again and do it openly and with the will of the electorate. If not it is doomed to failure.

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derek farman

Mar 03, 2011 at 15:25

George Woodhouse .... I too , broadly speaking , think being in the EU should be a good thing . But everywhere one looks , when things are getting out of kilter , it is increased stultifying beaurocracy which is almost always to blame .

Somehow , when people are busy, actually being productive , a certain type of paper pushing time waster finds their way in and things get messed up .

We are all to blame . Until we educate people to be productive , rather than parasites on the system , things will get no better

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