ECJ Gender Ruling could cost insurers millions

The implementation of the ECJ Gender Ruling could cost some insurers millions of pounds, say respondents to the Treasury’s consultation on the new rule.

Yesterday the Treasury published a summary of responses to its consultation on the controversial ruling, which aims to stop insurers basing premium rates on the sex of policyholders. The ruling is due to come into force on 21 December this year.

The Treasury received a wide range of specific estimates from respondents who attempted to quantify the impact of the ECJ Ruling on their business. Estimates ranged from £200,000 to £1.1m.

Others said they had not been able to quantify the costs but “expected them to reach into the millions of pounds”, the summary of responses said.

In addition to the costs set out in the consultation document, the Treasury said respondents had suggested a range of factors related to the ECJ Ruling that might increase costs for the industry. These included the costs of compensating consumers for complaints, future litigation, holding additional capital and implementing a gender-neutral strategy.

The respondents also highlighted the potential costs of increased cancellations in December as those in higher-risk groups leave and re-enter the market, the cost of increased switch-over between insurers (including broking costs) as premium changes prompt more consumers to shop around, and training costs.

The Treasury received 38 responses to the consultation, mainly from the insurance industry. Respondents included big-name insurers such as Aviva, RSA, Chartis Europe and LV=, and trade bodies ABI and Biba.

The ECJ Gender Ruling has been widely criticised for attempting to take away what is seen as a valid underwriting criterion for insurers.