Unisex insurance rates according to the jurisdiction of the ECJ


Unisex insurance rates according to the jurisdiction of the ECJ

Sunday, 13 January, 2013

Equity and Equality of men and women are central principles of the European Union and are therefore determined in primary law (e.g.: Art 2 et seq TEU, Art 19 TFEU as well as Art 21 and 23 Charter of Fundamental Rights). In this respect the European Council issued Directive 2004/113/EC that aimed to “eliminate inequalities and to promote equality between men and women in all its activities”. The Directive should ensure that Member States make appropriate further provision for the implementation of that principle to prohibit or at least limit any distinction based on gender. Nevertheless Art 5 para 1 of the Directive contained an exemption clause that “permit(s) 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.” As a result Austria made use of this option in § 9 para 2 to 4 VAG. According to that, unequal treatment of men and women is allowed when it is justified by actuarial methods.

With decision of March 1, 2011 the European Court of Justice has now ruled that these exemption regarding insurance policies could not be reconciled with the objective of Directive 2004/113/EC.

The Court therefore stated that “Directive 2004/113 is based on the premise that, for the purposes of applying the principle of equal treatment for men and women, enshrined in Articles 21 and 23 of the Charter, the respective situations of men and women with regard to insurance premiums and benefits contracted by them are comparable.”(Case C 236/09, Judgment of the Court of March 1, 2011, point 30)

Furthermore the ECJ also states that Art 5 para 2 of the Directive will be invalid with effect from 21 December 2012. Nevertheless Art 5 para 1 of the Directive remains untouched: “Member States shall ensure that in all new contracts concluded after 21 December 2007 at the latest, the use of sex as a factor in the calculation of premiums and benefits for the purposes of insurance and related financial services shall not result in differences in individuals' premiums and benefits”. The European Commission however noted that this will apply to “contracts concluded for the first time as from 21 December 2012”. Consequently, “offers made before 21 December 2012 but accepted as from that date will need to comply with the unisex rule.” (Commission Notice, C (2011) 9497)

Therefore it is expected that insurance premium of contracts concluded in the year 2013 will deviate from conditions offered before December 21, 2012. As an example motor vehicle insurance and term life assurance are presumed to become cheaper for men but more expensive for women. It is on the other hand likely that health insurance and pension insurance will become more expensive for men and more favorable for women.