Insurers will be able to price according to sex and age, following proposals released by the Treasury this week.
There had been fears that insurers would not be able to differentiate between customers based on age and gender.
This was partly linked to the implementation of the EU Gender Directive.
But following negotiations, insurers have successfully persuaded the government to allow insurers to be exempt from the proposed changes.
Stephen Haddrill, director general of the ABI, said: “The government recognises that it is fair for insurance companies to use data on age and gender in setting premiums for some products. This is because different groups of people represent different levels of risk in some types of insurance.
“We agree that specific legislation on insurance in the proposed Single Equality Bill is unnecessary and would be expensive for customers.
The consultation period ends on 3 September. The deadline for implementation is 21 December.