EU warning over insurance sex discrimination

Insurers must stop taking a person's sex into account when calculating their insurance, according to heavyweight advice submitted to the European Court of Justice (ECJ).

Advocate General Juliane Kokott, whose advice is rarely ignored by the ECJ, has said statistics showing different risks for the two sexes cannot justify different treatment of men and women because they do not demonstrate fundamental differences between the sexes.

The Advocate General’s opinion concludes that the use of risk factors based on sex in connection with insurance premiums and benefits is incompatible with the principle of equal treatment for men and women under European law. She concludes that the court should declare the relevant derogating provision in EU Directive 2004/113 invalid.

EU law prohibits insurers from taking a person's sex into account when creating insurance products or setting premiums. There is an exception to that rule, though, in the EU's Equal Treatment Directive.

Article 5(2) of the Directive says that countries can "permit proportionate differences in individuals' premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data".

The ECJ case was triggered by complaints to the Belgian Constitutional Court opposing the implementation of those rules.

Kokott said that the principle of equal treatment of men and women was vitally important. "Strict standards must therefore be imposed in the present case. Differences in treatment could at most be justified by clearly demonstrable biological differences between the sexes," said an ECJ statement outlining her opinion.

Michaela Koller, director general of the insurers umbrella body CEA, warned that there could be far-reaching implications for the price and availability of insurance cover if the opinion by the Advocate General is upheld by the ECJ.

She said: “The core principle of risk assessment is that people in comparable situations are treated equally and those in different situations are treated differently,” “If this risk-based, factual principle is not maintained, premiums will increase, coverage will decrease and some products will be withdrawn from the market entirely. Insurers must be able to calculate their premiums in a fair and sustainable way, using all relevant factors.”

“Insurers strongly support efforts to prevent discrimination, but if all insurance consumers are treated in the same way, some will inevitably be disadvantaged,” insisted Koller. “Insurers differentiate. They do not discriminate.”