Unisex Insurance and proposed gender equality from 21st December 2012 – what does it all mean?

From December 21st 2012,  it will no longer be permitted to offer differing premiums and/or benefits to policy holders based on gender. The proposed changes arose as a result of a decision of the European Court of Justice of the European Union in the Test-Achats case (Case C-236/09 Association Belge des Consommateurs Test-Achats ASBL, 1 March 2011) which stated that taking the gender of an insured individual into account as a risk factor in insurance contracts constitutes unlawful discrimination.On that basis the Court of Justice of the European Union declared invalid, from 21st December 2012, the facility (set out in Directive 2004/113/EC) allowing Member States to permit insurers to apply differing premiums and benefits to risk holders based on gender risk factors. The effect of this ruling is that Ireland is obliged to prohibit by law the selling of private insurance products which differentiate by gender on price or benefits and to have such provisions in force on or before 21st December 2012. The “unisex rule” will apply to all contracts concluded for the first time as and from that date. It also applies to agreements between parties as and from 21st December 2012 to extend contracts concluded before that date and which would otherwise have expired.As it stands, the Equal Status Act 2000 provides that insurers (and other persons providing goods and services) are allowed to discriminate on the basis of gender in limited circumstances. Insurers were permitted to charge different premiums and provide different benefits based on gender, if the basis for the differentiation was reasonable and based on reliable actuarial or statistical data (or other relevant underwriting or commercial factors). This will now need to changeOn 31st October 2012 the Department of Justice and Equality issued a press release, a scheme of the proposed bill for the Equal Status (Amendment) Bill and consumer information note in relation to the proposed gender equality measures for insurance.The General Scheme of Equal Status (Amendment) Bill as dated October 2012 provides for changes to Section 5, 14 and 41 of the Equal Status Act 20000. Amongst the changes proposed include:

1. the exemption of life and motor insurance contracts concluded prior to 21st December 2012 from the rule against gender discrimination;
2. confirmation that mid term adjustments in relation to motor insurance will not constitute “new” contracts for the purpose of the new rules;
3. a new subsection which confirms that it will not be prohibited for insurers to collect, store and use gender-centric information if it is genuinely required for (a) reserving and internal pricing (b) reinsurance pricing and (c) life and health underwriting; and
4. the ceasing of the Central Bank’s obligation (for 2012 and subsequent years) to compile, publish and maintain data relevant to the use of gender as a determining actuarial factor in risk assessment for life, motor or health insurance.

Although the deadline of 21st December is fast approaching, the Bill will be subject to ongoing consultation prior to being published and no specific timeframe has been given in relation to this.Many consumers may be still confused in relation to how insurance premiums will be calculated in light of the December 21st 2012 deadline. Whilst it is not possible to state with any certainty what will happen to insurance premiums, as insurance companies will no longer be allowed to quote different prices for insurance for men and women, the cost of premiums for some products may be affected and the guidance note from the Department of Justice provides a very high level guidance in relation to same.