The ECJ unisex insurance ruling
The European Court of Justice (ECJ) has delivered its ruling that insurers can no longer discriminate on the basis of gender.
Nick wrote a blog about this in February.
Rather than imposing an immediate ban on gender discrimination by insurers, they are delaying the introduction of this ruling until 21st December 2012.
The ruling has been made because the ECJ believes that gender-based insurance pricing is incompatible with human rights. It was in response to a challenge in the Belgium courts on the issue.
What this means in practice is that insurers will no longer be able to price their products separately for men and women.
As things stand, women receive lower pension annuity rates because they tend to live for longer than men.
Because women have a longer life expectancy, they pay less for life assurance. Their tendency to be more morbid means they pay bigger premiums than men for critical illness insurance.
Women benefit from lower car insurance premiums, because they are generally more careful drivers than men (or at least tend to cause less costly damage when they are involved in accidents).
In terms of annuity rates, the ruling is expected to see annuity rates for men fall by around 8%.
With the implementation of this ruling delayed until the end of next year, people approaching retirement have some time to plan for the changes. However, they should not wait too long before making important retirement income decisions.
Some annuity providers pre-empted the ruling with immediate changes to their rates, and we will now have to see if they change their rates back until next December or leave them as they are.
If annuities represent poor value for men in the future, as a result of this ruling, we could see Unsecured Pension (USP) becoming an increasingly popular retirement income option as an alternative to securing an annuity.
There is also a chance that insurers will look for other factors on which to base their pricing.
For example, they might price based on occupation, based on their research that some occupations are more likely to be populated by men or women. If this approach does start to take off, it is likely to be only a matter of time before Europe rules on this as well.
From a political perspective, this ruling is likely to place some pressure on the coalition government, particularly coming so soon after the controversy around votes for prisoners.
Photo credit: Flickr/quinet