ECJ Ruling on Gender Equality: Car Insurance

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Insurance premiums to change after ECJ gender ruling

Insurers cannot charge different premiums to men and women because of their gender, the European Court of Justice (ECJ) has ruled.
Auntie

The decision means that women can no longer be charged lower car insurance premiums than men.

The court was ruling on a challenge by a Belgian consumer group Test-Achats.

It had argued that a current exemption for insurers contradicted the wider European principle of gender equality.

"Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination," the ECJ said.

The requirement for unisex insurance premium and benefits will start on 21 December 2012, giving national governments and the European insurance industry time to adjust.

For car insurance, women are generally a lower risk to insure than men but will, in due course, have to pay the same premiums.

The ECJ decision will also affect the cost of buying an annuity - an annual pension - as women live for longer than men and so receive a smaller annual pension for the same pot of money.

The insurance industry has warned that the change will lead to men receiving a smaller annuity income than they do now when their benefits are brought into line with those for women.

Simon Douglas of AA Insurance told BBC News that the decision could add about £400 to the annual cost of car insurance for a young woman.

"Particularly for women under 30 where the difference is most extreme, they currently pay about half what a man would pay," he said.

"We could see their prices go up 25-30% and men's premiums could fall by about 10%."

Tom McPhail, a pension specialist at the investment firm Hargreaves Lansdown said the ECJ decision was a "seismic event which will fundamentally reshape the retirement landscape".

He predicted that annuity rates would equalise for men and women, at levels higher than female rates but "significantly worse" than current annuity rates for men.

"Rates will be volatile for the next few months as insurers monitor their new business and adjust their pricing in response to experience," Mr McPhail said.

Seems like a nonsense to me.

Women pay a lower car insurance premium because they are lower risk. Particularly those in the younger category when compared to the younger male equivalent.

There are certain aspects, circumstances, situations in life where men and women are simply not equal, or do not perform to the same consistent level.

Psychology behind the wheel of a car reflects a significant difference between the genders.

Women being forced to pay a higher insurance premium for the greater risk posed by men on the grounds that it is somehow discriminatory is ridiculous.