On 1 March, the European Court of Justice ruled that the use of gender as a risk factor by insurers should not result in individual differences in premiums and benefits for men and women, with effect from 21 December 2012.
The Government were very disappointed with this result, which it expects to have a negative impact on consumers. The judgment goes against the grain of the common sense approach to equality which the UK Government want to see. The Government believe that nobody should be treated unfairly because of their gender, but that financial services providers should be allowed to make sensible decisions based on sound analysis of relevant risk factors.
However, in the light of our obligation to implement the judgment, this statement sets out the Government’s understanding of the judgment; their intention to amend the Equality Act 2010; and the steps we are taking in Europe to secure legal certainty and to ameliorate the worse effects for consumers.
Legal interpretation and domestic policy approach
The Government’s view is that the judgment only applies to new contracts for insurance and related financial services entered into on or after 21 December 2012. In such contracts, the use of gender as a risk factor should not result in individual differences in premiums and benefits for men and women. However, any contracts with gender-sensitive pricing of premiums or benefits concluded ahead of 21 December 2012 can continue unchanged after that date. We will therefore proceed with amendments to schedule 3 of the Equality Act 2010. These amendments would be effected by Statutory Instrument under Section 2(2) of the European Communities Act 1972, which we propose to make early next year. Beforehand, the Government propose to issue a consultation on a draft order, including a full impact assessment, in the autumn.
European policy approach
The Government are working with the European Commission and other member states to ensure a unanimous view across the EU of the implications of the judgment, and the factors that need to be considered by member states in their implementation of the judgment.
While other EU member states and the European Commission are still considering the issues raised by the judgment, early indications are that our interpretation is shared across Europe. In view of the need for legal certainty, our preferred outcome would be an amendment of the gender directive to give effect to the judgment. We are therefore disappointed that the Commission has said it has no plans to propose any amendment, leaving the text of the directive inconsistent with the court’s decision. In view of the 21 December 2012 deadline, we will continue to work with other member states to press the Commission to propose such an amendment at the earliest opportunity.
The Commission has said that it proposes to issue guidance on the interpretation of the judgment and its implementation by member states. Although guidance will not offer all the advantages of a legislative amendment, we nevertheless welcome this and will work constructively to ensure it is as helpful and clear as possible. In view of industry’s need for early clarity about how to implement the judgment, we will press the Commission to bring this forward as soon as possible.