What does the European Court ruling on gender (Test Achats) mean for me?

The European Court has ruled that insurers can no longer consider whether you are a man or a woman when pricing insurance policies from 21 December 2012. The main policies to be affected are those which use gender as a factor in pricing for risk: motor insurance, annuities and life insurance.

It is important that you stay protected

The UK insurance market is very competitive, and customers have a lot of choice. Insurance in the UK remains good value even in light of the judgment. The judgment applies from 21 December 2012, so there is no need to act now.

Insurance is crucial in protecting you against accident or illness or in helping you provide for your retirement. It is very important that you do not stop paying your premiums as that would leave you without cover.

This judgement will not affect all customers. Each insurer will need to look at the detail of this judgement and make specific decisions based on their own customers. All insurers will work to manage the effects of this ruling for their customers.

What does this mean for my car insurance?

This will not affect all motor insurance customers and individual insurers will be looking very closely at the detail of the Court judgement and doing everything possible to manage its effects on customers. This ruling does not come into effect until 21 December 2012 so no changes will need to be made to current policies.

The biggest gender-related differences in the terms and price of motor insurance have typically been seen among men and women under 25, as young men as a class are statistically more likely to have an accident than women, so if you are under 25 you are more likely to notice a change in your policy arrangements.

It is very important that you do not stop paying your insurance premiums – this would mean you were no longer covered by your motor insurance policy and driving without insurance is illegal.

What does this mean for annuity customers?

Insurers calculate annuities based on your pension pot to give you a guaranteed income every year for as long as you live. Women statistically live longer than men, so their yearly annuity payment has tended to be lower because they receive it for a longer period of time so the total amount ends up being about the same.

Today’s ruling means that insurers will not be able to use gender as a factor in calculating an annuity from December 2012. That means that those looking to retire must be offered an annuity rate after 21^st December 2012 which does not take into account whether you are a man or a woman. Customers approaching retirement should shop around for the best annuity rate available as well as the most appropriate type of annuity for them and should consider taking financial advice about whether they should defer buying an annuity until after this date.

Most customers who have already bought an annuity and are receiving their payments should not be affected by this ruling. However, there are still details that need to be worked through and we are doing that now with the UK Government and regulators. Your pension provider will contact you if they need to discuss any of the details of your policy.

What does this mean for life and health insurance customers?

If you take out a new life, critical illness or income protection insurance policy, from 21 December 2012 insurance companies will be required to charge men and women the same premium rates. Most customers who have bought and finalised a policy before 21 December 2012 should not be affected. However, there are still details to work through and we are doing that now with the UK Government and regulators. It is very important that you keep paying your premiums as normal to keep your policy and your cover in force.

What should I do now?

Read the details of your existing policies to be clear what insurance you currently have. However, your insurer, or its representatives will contact you in the event of any changes to your policies so there is no need to act immediately.

The European Court of Justice has given insurers until 21 December 2012 to comply with this judgement. UK insurers are now looking closely at what they need to do to comply. They are determined to do everything they can to manage any negative effects for their customers.

Will this affect the price of my insurance?

From 21 December 2012 the European Court of Justice has said insurers cannot take into account whether you are a man or a woman when pricing products like your car insurance, or your pension. This will impact on the way insurers calculate the price of your insurance, but every individual insurer will look at the implications of this judgment and will make their own commercial decisions. The UK insurance market is the most competitive in the world, and you will still have a lot of choice of the type of product you buy and where you buy it.

Why didn’t you stop this from happening?

The Association of British Insurers has worked very closely with the Government to try and stop this from happening since 2002, when the European Commission proposed the Gender Directive which banned discrimination on the grounds of whether you are a man or a woman. We managed to win an opt out for the insurance industry, which meant that insurers could continue to take gender into account when pricing your insurance. Today the European Court of Justice has ruled insurers cannot do that anymore.

We have fought against the possibility of this for the last decade and are disappointed for our customers.