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EU Gender Directive and The Impact On Insurance Rates

by admin on February 11, 2013

EU Gender Directive and The Impact On Insurance Rates

What is the EU Gender Directive?

The EU Gender Directive may not sound very exciting, but this new legislation will affect how much you will now be charged when you look to renew various policies, such as car insurance or life insurance. This new legislation came into effect on the 21st December 2012, and both women and men are likely to see rises or falls in prices, depending on the type of insurance in question. It is having a large impact on premiums as insurers are no longer able to take gender into account whilst making their calculations.

Why Did it Come About?

The EU Gender Directive is a change in the law which has been brought into effect by the European Court of Justice (ECJ). It has ruled that no individual should be treated more or less favourably than another person due to their gender. This means that the UK insurance industry can no longer charge men or women different rates for their insurance based on their gender as this will now be considered sex discrimination.

What Impact will this have on Insurance?

Under the new ruling, although some groups may benefit, it is likely that there will be an overall rise in insurance premiums for both men and women. The ruling will cover various insurance policies including car insurance, life insurance, critical illness cover and pension incomes.

How will the EU Gender Directive Affect Car Insurance?

Historically, car insurance has been cheaper for women than men, as statistically women have been less of a risk on the road. Now that insurers are no longer able to make this gender distinction, premiums for women are expected to rise significantly, particularly for younger women, whereas young men may save a small amount on their own premiums. A recent report from the AA Insurance Premium Index (released in January 2013) has shown that, since December 2012, there has already been an average increase of 42% for premiums for 17-18 year old female drivers and a decrease of 17% for males the same age.

How will the EU Gender Directive Affect Life Insurance?

Women have historically been quoted less for their life insurance, as they tend to live longer, meaning that they are less likely to make a claim on their policy. A result of the ruling now means that this gender related fact must be ignored. There is an expectation that future premiums will rise, particularly for women, and men may see a decrease. However, it is difficult to predict just how many, as other factors such as existing health conditions, age and whether or not you smoke are also taken into account.

How will the EU Gender Directive Affect Critical Illness Insurance?

Although many UK medical insurers did not previously take gender into account when calculating premiums, this sector is also likely to be affected. According to Which magazine, critical illness premiums are likely to rise by 30% due to the EU Gender Directive regulations and other changes in the market.

How will the EU Gender Directive Affect Income Protection Premiums?

Many people buy an annuity when they retire. This is a financial product which will guarantee a lifetime pension income. Women should therefore now benefit more from retirement income policies as they have traditionally received lower annuity payments to reflect their longer life expectancy.

How the EU Gender Directive will Affect You and Your Insurance Premiums

These changes will only affect new insurance policies and renewals, so any price adjustments should only become apparent at the time when you renew your policy. Existing annuities shouldn’t be affected. When you are due to take out an annuity, you should consult with an independent financial adviser for more information and guidance about your different options.”

Ian Wright works for Experts In Money a leading resource in the UK for financial information.

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