When is outlawing discrimination discriminatory? The European Commission (EC), the European Union’s regulatory authority, has been wrestling with that question for two years, and has finally come down on the side of common sense.
The EC has just announced that is canceling its controversial plan to extend gender discrimination over a wide range of the EU’s insurance industry, much to the relief of the EU’s female population and their insurers. Henceforth the EU will prohibit outright discrimination based on gender, but will allow the industry to take it into account in setting rates that are in fact beneficial to women.
The initiative, first proposed in December 2003, would have included a blanket prohibition on insurers from considering gender when setting insurance premiums. Paradoxically many consumer groups opposed it, as they charged that it would effectively raise premiums, especially on life and auto insurance, for women, who, at least in Europe, tend to be safer drivers than men, and tend to live longer as well.
The EC had put off a decision on whether to include the prohibition in new rules it has been working on (See IJ Website Oct. 8). It finally decided that the new regulations, which came into effect January 1, 2005, would not apply to coverage such as auto and life insurance.
The proposal had also been widely condemned by the insurance industry, as it would have limited an underwriters’ ability to price premiums appropriately and as such, consumers would suffer from a blanket approach to premium pricing that would eliminate a salient variable in assessing risks.
When the EC announced that it was delaying implementation of the proposals, the Association of British Insurers, the U.K.’s insurance trade association, commented: “We are encouraged to hear that the EU Council of Ministers has recognized the validity of gender as a factor in insurance, though it is disappointing that a final decision has been held over to December. The UK government has continued to support our views on the benefits of gender pricing for our customers and we hope that the issue will be settled in December.” The ABI (and the EU’s women) should be pleased with the outcome.
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