Denis Staunton,

in Brussels

The European Commission has proposed a directive that would ban discrimination between men and women in calculating insurance premiums and benefits. At present, women usually pay less than men for motor insurance and life insurance but pay more for health insurance and pension benefits.

The insurance industry has reacted with alarm to the proposal, predicting that it would lead to a rise in premiums.

Mr Paul McDonnell of the Irish Insurance Federation (IIF) said young women could find themselves paying more for motor insurance, while young men, who are regarded as a greater risk, could pay less.

"We believe the long-term effect of this will be to increase the cost of insurance," he said.

The Employment and Social Affairs Commissioner, Ms Anna Diamantopoulou, described the proposal as a ground-breaking step towards gender solidarity in Europe.

"As with past breakthroughs in the field of gender equality, it is being greeted with pessimism from some parts of the industry. Contrary to what businesses may fear, this directive would establish a public policy decision that gender discrimination in the access to and supply of goods and services is unacceptable. Therefore, it secures a level playing field for businesses in the EU and consumer prices," he said.

The directive would ban discrimination between men and women in all goods and services but would allow exceptions such as same-sex sessions in swimming pools and single-sex private members' clubs.

Services such as hairdressing, which require different skills for the two sexes, could continue to discriminate between men and women.

Insurance companies argue that women pay less for life insurance and more for pensions and annuities because they tend to live longer than men. But the Commission maintains that other factors, such as socio-economic or marital status, are just as important as sex in determining life expectancy.

Mr McDonnell expressed astonishment at the Commission's reasoning, which implies that insurers should discriminate between different income groups but not between the sexes.

The Commission's proposal must be approved by the EU's 15 member-states in the Council of Ministers and by the European Parliament before it becomes law. Even if it survives that process, which could take more than a year, the directive would allow insurance companies six years to change their policies.

IIF chief executive Mr Michael Kemp said that, along with its European counterparts, the federation would continue to lobby against the Commission's proposal.

"Today is just the adoption of it as Commission policy. It still has a long way to go," he said. "However, it certainly causes us some concern."

He said the move was something the insurance sector had been lobbying against.

The measure would have to be accepted unanimously by EU ministers and Mr Kemp said he expected the measure would look different from what was now being proposed "when it comes out the other end".

He said the differing prices charged to women and men was not a case of discrimination "in the pejorative sense".

He said the Commission's proposal was contrary to the basic right of insurers to underwrite. The differing prices charged to women and men were based on "objective" evidence and risk assessments.