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CEA regrets ECJ judgement on use of gender in insurance pricing

01 March 2011
by CEA -- last modified 01 March 2011

The CEA, the European insurance and reinsurance federation, is deeply disappointed by today’s judgement by the European Court of Justice (ECJ) that the provision enabling EU insurers to use actuarial and statistical factors based on sex in their risk assessment is invalid from 21 December 2012.


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"The decision of the judges not to recognise that gender is a legitimate factor in insurance pricing and that insurance pricing is based on a fair risk assessment process could be bad news for insurance customers," said Michaela Koller, director general of the CEA.

"Insurers will consider this judgement carefully and will ensure that there is minimum disruption and impact for consumers," said Koller. "Nevertheless, Europe-wide the effect on the price and benefits and on the choice of insurance products for consumers could be significant."

The ECJ decision invalidates from 21 December 2012 the current derogation in EU law that allows for sex-specific differences in insurance premiums and benefits where sex is a determining risk factor.

The use of evidence-based statistics is indispensable in actuarial science, and gender has been proven to be one of the factors that has an obvious impact on the risks to be covered in such products as motor, term-life and health insurance and annuities.

Although insurers will ensure that their products remain as competitively priced as possible, some insurers will now face significant additional costs in reassessing data, transforming premiums and changing terms and conditions and marketing materials for certain products. From an actuarial point of view there is therefore good reason to believe that this judgement could ultimately have an impact on the prices insurers need to charge consumers.

While these would be purely commercial decisions for each individual insurer, increased premiums are to be expected for some groups, such as young women drivers, in markets where gender was previously used in motor insurance pricing.

Any increase in the cost and decrease in the choice of pension products could have a social impact on levels of retirement saving at a time when state pension schemes are already under financial pressure.

Adaptation will be challenging for the industry, especially for small and medium-sized insurers, within the short transition period of under two years.

The CEA is starting a thorough analysis of the possible effects of the judgement on both consumers and insurers.

The European Commission, for its part, now has to adapt the EU Gender Directive accordingly.

Link: CEA policy paper "The use of gender in insurance pricing", February 2011

The CEA is the European insurance and reinsurance federation. Through its 33 member bodies - the national insurance associations - the CEA represents all types of insurance and reinsurance undertakings, eg pan-European companies, monoliners, mutuals and SMEs. The CEA, which is based in Brussels, represents undertakings that account for around 95% of total European premium income. Insurance makes a major contribution to Europe's economic growth and development. European insurers generate premium income of over EUR 1,050bn, employ one million people and invest more than EUR 6,800bn in the economy.

CEA, the European insurance and reinsurance federation
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