If European Court of Justice makes it illegal to take gender into account in setting premiums, prices will rise across the board, say insurers
Top insurers have warned that consumers will face higher costs for car insurance, life insurance and annuities if the European Court of Justice enforces a ban on using gender as a factor in setting premiums.
The Luxembourg court has been asked to rule on an opinion reached by the advocate general, Juliane Kokott, that it is legally inappropriate for insurers to link risk to a person's sex. If the court supports her opinion, UK insurers will no longer be allowed to differentiate between men and women when underwriting a variety of types of financial products.
Women currently pay less than men for car insurance because statistics show they are less likely to have serious accidents, and accidents they do have cost insurers less. The Association of British Insurers (ABI) says that if the ECJ makes this opinion law, women's motor premiums will rise by 25%.
And because men have a lower life expectancy than women, they have traditionally paid less for annuities (which pay a regular income until death) but more for life insurance. A ruling in support of the advocate general would see this differential narrow.
Malcolm Tarling, spokesman for the ABI, said: "We believe this will be extremely detrimental to UK consumers. If insurers aren't able to take into account risk factors, it will have widespread implications."
It is not clear from Kokott's opinion, published last autumn, whether she believes insurance pricing should be equalised within brands or within companies: many UK insurers operate several brands, targeting audiences of a specific sex or age group.
Sheilas' Wheels, part of online insurer esure, specialises in cover for women. It says it would not be affected by a ruling outlawing the use of gender so long as it only has to equalise prices within the brand. Spokesman Adrian Webb said: "Sheilas' Wheels underwrites men as well as women, but only a tiny proportion of our half a million customers are men. That means if prices were equalised, it would make no difference to premiums."
However, the insurer is concerned that across the UK women could be paying "over the odds" in premiums to cover the claims their insurance pool incurs. Webb said: "Many single mothers and lone females will be in more vulnerable positions due to a rise in the cost of their cover and the alternative choices they will have to adopt if they can no longer afford insurance."
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