European stupidity on insurance

This has been around for ages, the idea that gender equality means that using gender to discriminate in the provision of insurance or annuities should be outlawed. But the crunch is coming, with the ECJ ready to rule on March 1.

Proposals for \”gender equality\” insurance have been around for years. But insurers have always argued that banning gender as a factor when calculating premiums would be ridiculous, bearing in mind the significant differences in the \”riskiness\” of men and women – women live longer, young men are more likely to have car accidents, and so on. In the end, member states were allowed to opt out of an EU prohibition, provided certain requirements were met. The issue, however, has continued to be controversial, and on 1 March the court in Luxembourg will deliver its verdict on a test case by a Belgian consumer body.

Laith Khalaf, pensions analyst at investment firm Hargreaves Lansdown, says the prevailing opinion in the industry is that the court is going to rule that taking a person\’s sex into account is illegal.

If they do rule that way then it will be the triumph of insanity.

There are certain things which are simply as they are. Apples fall from trees, politicians are corrupt and venal and insurance is based upon the real world risks and likelihoods of something happen.

Women live longer than men on average meaning that any specific lump sum will buy a smaller annual income. Male drivers are risker than women so they pay more for car insurance.

This is simply nonsensical: can we leave yet?

9 comments on “European stupidity on insurance

  1. Quite agree with Tim’s point. But how far do we take the principle behind his argument? For example young women more liable to quit their jobs than men because of child rearing. But as I understand the law, it is illegal to pay women less than men for this reason.

    Personally I think it SHOULD be legal to pay women less for the above reason. Reason is that GDP is maximised where employers do their costing accurately, and that includes the reality that employing women, all other things being equal, costs more than employing men (because of child rearing).

    If society then wants to compensate women for this “unfairness” that’s fine by me. But the funds should come from general taxation, not from employers.

  2. Insurance is about pooling risk. The more insurers identify and price high risk groups, theclads likelybthey are able to afford it, while the lower risk groups see a small drop in premium.

    Lower risk groups are supposed to subsidise higher risk groups, especiallyvwhen the causes of variations in risk are beyond the insureds’ control.

  3. “Lower risk groups are supposed to subsidise higher risk groups ”

    Well not necessarily, you see risk means that something may or may not happen – this means that insurance can be a benefit even within groups with the same risk

  4. XX
    1 Ralph Musgrave // Feb 19, 2011 at 10:20 am
    For example young women more liable to quit their jobs than men because of child rearing. But as I understand the law, it is illegal to pay women less than men for this reason.

    Personally I think it SHOULD be legal to pay women less for the above reason. XX

    Total BOLLOX!

    Make it easier to sack them for getting pregnant, but until that point, if they are doing the same work as their male collegues, they should get the same pay.

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  6. Looking a little further ahead, I can’t avoid feeling a certain forboding that the UK Treasury, if forced to move on this issue, might suddenly discover within itself a scrupulous concern that the change be introduced on a non-retrospective basis.

    The worry, of course, is that the machinery for non-retrospection would be equally well suited for non-retrospection of any new tax on pension commencement lump sums. The relevant papers were interred when Nigel Lawson was forced to backdown in 1985; I am sure they’ve not been lost.

  7. Can I sue the EU commission in the ECHR for arbitrarily confiscating a substantial proportion of my money-purchase pension?
    Any Insurance Company that is required to offer unisex annuity rates will *have* to offer rates appropriate for females because if it does not it will be overwhelmed by females buying underpriced annuities and go bust (thereby depriving *all* of its customers of a very large part of the pensions that they were promised – just look at the lawyers and accountants fees for Equitable and Madoff).
    For the whole of my adult life (and for some time before), women have paid lower life assurance premiums than men of the same age because they were expected to live longer. Currently “impaired lives” can obtain a higher annuity rate because they are likely to die sooner but some EU lawyer says that men, who do die sooner, should not be allowed to do so.

  8. John77,

    I am quite sure that, were you to proceed against the EU Commission, then the ECHR would just hand back the hot potato straight back to member state governments with an airy disclaimer that the terms of compulsory annuity purchase have nothing to do with the inter-governmental tier.

  9. Do I have to be a grumpy old man to post here?

    Oh well I’ll assume not (maybe there’s a directive banning such discrimination in blogging).

    This is the first time in ages I’ve encountered a complaint about the EU that actually made sense (and no please, spare me your horror stories, or then I will be forced get grumpy).

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