ONE OF the State’s largest insurers has warned that premiums may rise significantly if Europe’s highest court rules companies cannot use a person’s gender to determine prices.
Life assurance and motor insurance policies may climb dramatically for women in particular, while income protection and critical illness premiums could increase for men.
Under EU law, insurers cannot take a person’s gender into account when setting premiums, although exceptions are permitted if it is considered to be a determining factor in the assessment of risk based on “relevant and accurate actuarial and statistical data”.
Last October, the European Court of Justice advocate general Juliane Kokott published a ruling arguing it was “legally inappropriate” to link insurance risks to a person’s gender.
She said: “The use of actuarial factors based on sex is incompatible with the principle of equal treatment for men and women.”
The European Court of Justice makes its final decision next week; the opinions of advocate generals are followed in about 80 per cent of cases.
If the court backs Ms Kokott, the consequences for the motor and life insurance industries and the pension industry will be potentially very costly.
In a memo sent to brokers this week, Irish Life, one of the State’s largest insurers, said if the court supported the advocate general, “protection and annuity rates are likely, at least initially, to move to the more expensive gender’s rates, so life cover rates for women will get more expensive (either immediately or at a future date). Income protection rates for men, which are generally cheaper than women, will get more expensive,” it said.
Women pay less for life insurance than men because they live longer on average, but they pay more when it comes to pension funds, again because of a longer life expectancy.
Male drivers, particularly those under 30, can pay nearly 100 per cent more for motor insurance than their female counterparts.
Irish Life warned brokers in the process of finalising policies for customers that women may face higher life premiums if the policies were not fully completed before next week.
Industry experts have said, however, it is unlikely that existing contracts will be affected even if the court rules against gender differences.
Michael Dowling, a spokesman for the Independent Mortgage Advisers Federation, said: “If the court backs the ruling, then it means that in most instances premiums are going to rise, particularly for women.
“I can’t, however, see companies upping their premiums immediately,” he said.
