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Insurance: Gender Discrimination

Volume 725: debated on Tuesday 8 March 2011


Asked By

To ask Her Majesty’s Government whether they intervened in the case before the European Court of Justice on gender discrimination in insurance policies and annuities.

My Lords, the UK Government, along with a number of other member states, the European Council and the Commission made oral and written representations to the European Court of Justice during legal proceedings. The representations argued that, rather than preventing true equality, the article in question ensured that different cases could be treated differently, thereby ensuring true equality. However, the court has ruled that the practice of using gender as a factor in the calculation of premiums and benefits must cease, with effect from 21 December 2012.

I thank the Minister for that reply, and I sense that she was as unhappy with it as I and, I suspect, most of the House will be. The problem is that article 5.2 of the gender directive, as the Minister indicated, allowed an opt-out where there was clear, up-to-date statistical evidence that gender was a major risk factor in insurance. That evidence still exists. It is a fact that women tend to live longer than men, yet an insurer is required by the court to ignore that in computing either insurance premiums or annuity rates. Does the Minister agree that it is likely that all of us will be worse off, because a sensible and prudent insurer must provide for the worst-case scenario and cannot predict whether the uptake will be mainly male or female? What steps are the Government taking to remedy this situation, bearing in mind, as she said, that we are not alone? Indeed, the European Commission itself intervened in the case.

My Lords, the noble Lord has referred to a number of very difficult decisions that had to be taken. We are disappointed by the ruling. The previous Government made written representations and we made oral representations, but the judges unfortunately decided that by 21 December 2012 it will be illegal to discriminate on the basis of gender. It is clearly undesirable to treat people unfairly because of their sex. However, financial services providers will be allowed a period in which to make the changes. We are encouraged that people have supported our drive for equality. Unfortunately, things such as this make our task much more difficult. I am pleased to say that the insurance industry has adopted a can-do attitude to this ruling, and I am sure that we will do our very best as a Government to assist it.

My Lords, what steps have the Government taken to discuss this judgment with the insurance industry in order to prevent profiteering? Why has my stepdaughter's motor premium gone up now, when there will be no difference until December 2012?

My noble friend raises another very important issue. We cannot dictate to insurance companies how they should make judgments on how their premiums should be costed. However, we are working closely with insurance companies and the financial services sector to ensure that they do not roll out unfair premiums on the back of this ruling.

My Lords, it is a pretty remarkable day when an insurance market is instructed to operate contrary to actuarial principles. Are there not two things that could flow from this? Either everybody will be forced to buy their insurance within the EU by some means or other, which would surely be contrary to both the spirit and the letter of our WTO commitments; or those categories of people disadvantaged under the new ruling will simply buy their annuities or motor cover offshore, outside the EU, in the United States, Canada, Bermuda, the Channel Islands or wherever. In those circumstances, a substantial industry will develop offshore to supply those important segments of the EU market at the expense of the EU economy.

My Lords, the noble Lord raises a question that I posed to civil servants. The response I received was that any insurance sold in the EU, whether or not it is from outside the EU, will be applicable under these rules.

My Lords, I have some sympathy with the predicament of the noble Baroness, but perhaps she would tell the House whether the Government, if they had the choice, would support the payment of equal annuities to men and women who have earned an equal financial entitlement to them, rather than continuing with the existing system in which a woman gets considerably less just because her average life expectancy is a few months more.

My Lords, the noble Baroness raises very important questions. However, the responses to these questions are for the industry to make.

My Lords, does not this demonstrate that on this occasion the Court behaved as a court of injustice?

My noble friend raises a good point, but I am afraid that I have to go by the ruling, as we all do as members of the EU.

It is about time a Labour speaker was allowed to join in, unless they have changed the rules of the House. First, I will break a lifetime's habit and congratulate the Minister on the excellence of her answers. Is she absolutely certain that there is nothing Her Majesty's Government can do to move back on this matter? It is immensely damaging to the workings of the insurance market, which will be immensely damaging for our country in particular. Can nothing be done to get this reversed?

My Lords, the Government will continue, with other member states, to press to see what can be done, but I am afraid that there is no appeals process under the ruling.