Following the Court of Justice of the European Union’s (CJEU) Test Achats ruling last year, from 21 December 2012 insurers will not be able to use gender as a factor in calculating insurance premiums for any “new contract”. Insurers are concerned, however, that changes to policies over-lapping with this date (or “mid-term adjustments”, as they are commonly known) could cause a “new contract” to be formed.
The Gender Directive does not give any indication of when a “new contract” is triggered. In Ireland and other European jurisdictions, the concept of what constitutes an insurance policy was thought to revolve principally around national principles of contract law. The European Commission, however, issued guidelines on the Test Achats judgment which stated that a “new contract” is an autonomous concept of EU law. The guidelines do not, however, provide sufficient detail on the concept to allow insurers to apply it to the various scenarios that they might face. While some guidance can be derived from other European sources, this EU-law concept remains unclear for the time being.
In the context of Ireland, the exemption allowing insurers to use gender is contained in section 5(2)(d) of the Equal Status Act 2000. The change to this section as a consequence of Test Achats has yet to be announced.
So, where does this leave insurers? Firstly, it should be noted that the European Commission’s view on a “new contract” is not legally binding. Assuming, however, that the Commission’s view is correct, how can insurers reconcile this against their existing contractual obligations to policyholders based in national contract law? Treating mid-term adjustments differently after 21 December 2012 could breach existing contracts and consumer protection laws.
The UK Treasury, in their recent response to Test Achats, advised insurers to look to their own individual circumstances, relevant to their own contracts. Until Irish guidance is available, Irish companies may wish to consider the contents of UK Treasury’s paper.
Until such time as this concept is clarified, it remains to be seen who will pass and fail Test Achats.
Contributed by: Kerrie Glynn
