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ECJ insists on unisex insurance premiums from December 2012

1 March 2011

The European Court of Justice has said that insurance companies will no longer be able to discriminate on the grounds of sex from 21 December 2012.

The move, strongly resisted by the UK insurance industry, means that women will pay more for motor insurance and men will receive less income from annuities.

A Belgian consumer group had challenged the validity of article 5(2) of the directive on equal treatment in the supply of goods and services (Directive 2004/113/EC).

This allowed member states to permit differences in individuals’ insurance premiums and benefits where the use of sex was the “determining factor” in the assessment of risk.

The Advocate General gave an opinion in September last year that the article was incompatible with the principle of equal treatment and unlawful.

Giving judgment in Association Belge des Consommateurs Test-Achats ASBL v Counseil des Ministres (case C-236/09), the Grand Chamber of the ECJ said that the Equal Treatment Directive was silent as to how long member states could allow the exception for insurers under article 5(2).

As a result there was a “risk that EU law may permit the derogation from the equal treatment of men and women, provided for in article 5(2) of Directive 2004/113, to persist indefinitely.

“Such a provision, which enables the member states in question to maintain without temporal limitation an exemption from the rule of unisex premiums and benefits, works against the achievement of the objective of equal treatment between men and women, which is the purpose of Directive 2004/113, and is incompatible with articles 21 and 23 of the charter.

“That provision must therefore be considered to be invalid upon the expiry of an appropriate transitional period.”

The ECJ concluded that article 5(2) of the directive was invalid with effect from 21 December 2012.

Maggie Craig, acting director of the Association of British Insurers, said the decision was “disappointing news” for UK consumers and something the UK insurance industry had fought against for the last decade.

“The judgment ignores the fact the 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,” she said.

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Financial services & Tax Discrimination Local government