On 1 March 2011, the European Court of Justice (ECJ) handed down its much anticipated ruling in the Test Achats case in which it decided that from 21 December 2012 unisex insurance premiums and benefits will apply to all general and life insurance.

Facts

The 2004 Gender Directive provided for the introduction of unisex insurance premiums and benefits from 21 December 2007.  As insurers throughout the EU relied on gender as a determining factor in calculating premiums and benefits, however, the Directive provided for a derogation from this requirement. The derogation allowed insurers to continue to rely on gender as a determining factor provided that any such differences in premiums and benefits were justified on actuarial and statistical data.  The Directive did not set a limitation period for the availability of the derogation but instead allowed member states to review the position on 21 December 2012. The Belgian Constitutional Court asked the ECJ to determine whether the derogation was inconsistent with the fundamental principle of equal treatment for men and women.  

Decision

The ECJ decided that the derogation was invalid as it gave rise to a possibility that gender inequality may persist indefinitely; the Court felt that a transition period would be necessary and so set 21 December 2012 as the end date for the derogation.   

Comment

Insurers must now be alive to the requirement for gender neutrality in writing new business. Contracts entered after 21 December 2012 will have to be gender neutral. The position of contracts entered into prior to that date but for which premiums and/or benefits are not payable under after 21 December 2012 is less clear. It is expected that the European Commission will enact an amending directive to deal with the fall out of the decision. In the meantime, and pending enactment of national legislation to give effect to such an amending directive, insurers will have to consider how best to adapt their business practices in time for the 21 December 2012 deadline or such earlier date as national legislation may provide.

The concern is that the ruling will impact negatively on consumers and will ultimately result in higher premiums and/or lower benefits.

Contributed by Grant Murtagh, John Larkin.