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ECJ demands unisex insurance premiums

7 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 means that women will pay more for motor insurance and men will receive less income from annuities.

A Belgian consumer group challenged the validity of article 5(2) of the Equal Treatment Directive (Directive 2004/114/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.

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.

The ECJ concluded that article 5(2) of Directive 2004/113 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 that 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.”

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Financial services & Tax Discrimination EU & International