UK insurers face “large-scale adjustments” over ECJ gender ruling
by Gill Montia
The decision by the European Court of Justice (ECJ) to ban the use of gender in insurance policies from December 2012 has been described as “disappointing” by the Association of British Insurers (ABI).
According to the ABI, over the next 20 months insurers will have to make large-scale changes including amending all affected policy documentation; contacting customers with new information; updating and changing computer systems; ensuring insurance brokers have the right pricing information; adjusting insurance renewals and updating all sales material.
The ABI also points out that the judgment will particularly affect products such as motor insurance and annuities, having commissioned research in autumn 2010 which highlighted the possible impact of removing gender from assessing risk as follows:
For motor insurance: women under the age of 25 could see an average rise of 25% to their premium.
For annuities: men approaching retirement could see an 8% reduction in annuity rates while rates for women approaching retirement could rise by 6%.
For life insurance: women could see a rise of as much as 20% in the cost of cover, while men could see a fall of 10%.
The ABI’s acting director general, Maggie Craig, comments: “Insurers will now study this judgment carefully to manage negative effects for customers.”
She adds: “It will be crucial to ensure this news does not put people off having vital insurance that protects them against accident or illness, or provides an income in retirement.”