A RULING BY the European Court of Justice that a person’s gender cannot be used by the insurance services sector in setting the cost of premiums is likely to have far-reaching implications for both women and men. Preliminary indications would suggest that some elements of the industry regard this development as an opportunity to increase their profits. At a time when cost competitiveness will play a crucial role in economic recovery and job creation, such an approach would be wholly inappropriate and should be closely monitored by any incoming government.
There is no doubt that the judgment will generate uncertainty concerning risk assessment and the industry will have to re-evaluate and update its actuarial systems. But that should not mean – as one expert suggested – that huge costs will be involved and everyone will end up paying more. The court ruling does not take effect until December 2012, and there is plenty of time to arrange for an orderly transition. A gender ban came into force in December 2007 but EU states were allowed a five-year transition period, provided the underlying statistical data used in setting charges were reliable.
There has been criticism of the judgment from within the industry, some of it logical. In spite of car crash statistics, the practice of charging all young male drivers up to double the premium of all young women can be seen as discriminating against careful, responsible males. It anticipates anti-social behaviour. That bias between the sexes tapers off at the age of 40 or 50. On the other hand, a biological difference that allows the average woman live longer than a man, has led to lower life insurance and health costs along with higher annuity charges for females. That will now change even though sexual discrimination is not a motivating factor.
The most visible changes are likely to come in the motor insurance sector and involve drivers under 30 years of age. Young women could face increases of up to 25 per cent on their premiums. Elsewhere, Irish Life, one of the largest insurance companies in this State, has already informed its brokers that health protection and annuity rates for women and income protection rates for men are likely to become more expensive. Insurance costs are already high by international standards. They should not be increased in the absence of full transparency. This judgment will reshape not just motoring and health insurance but also the retirement/pensions sector of the industry.