Treasury Minister Mark Hoban said he will consult the insurance industry on changing U.K. law to comply with a European Union court ruling that stops insurers from taking people’s gender into consideration.
Hoban said that the government is also pressing the European Commission, the EU’s executive branch, to issue guidelines “as soon as possible.” The EU Court of Justice, the 27-nation region’s top court, ruled in March that insurers won’t be allowed to discriminate between sexes when pricing insurance premiums from December next year.
“The judgment goes against the grain of common sense,” Hoban said in a written statement to Parliament in London today. “Financial-services providers should be allowed to make sensible decisions based on sound analysis of relevant risk factors.”
Auto-insurance premiums for female drivers could rise by as much as 50 percent as a result of the decision, according to accounting firm KPMG LLP. Young women will bear the brunt because insurers are reluctant to cut prices for men of the same age because they are more dangerous drivers, Admiral Group Plc (ADM) Chief Executive Officer Henry Engelhardt said in March.
The ruling by the Luxembourg-based tribunal, which is binding and can’t be appealed, will have a bigger impact in the U.K. because most policies are written for named drivers. Elsewhere in the EU, policies are car-specific, allowing any driver and leaving less room for pricing disparities between genders.
Hoban said that the government plans to amend the Equality Act to implement the changes and that he will consult the insurance industry by the fall. He said insurers need clarity on how the ruling will be implemented across the EU and he will continue to push Brussels for guidance.
Many European insurers calculate premiums according to the risk associated with an individual. For example, they charge women more for annuity coverage and less for mortality insurance, as a result of their longer average life expectancy. The court’s decision will prevent them from continuing to do so.
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