ABI Issues Guidance for Impending ‘Gender-neutral’ Insurance Pricing

September 25, 2012

With three months to go until the European Court of Justice ban on insurers taking a person’s gender into account when calculating premiums and benefits, the Association of British Insurers (ABI) has published guidance for consumers.

“Gender has always been one factor in assessing risk in insurance, with different risks linked to gender being taken into consideration to calculate premiums and benefits,” the ABI said. “Women, for example, have typically benefited from lower car insurance premiums because of their lower accident rates, and men have tended to receive higher annuity rates because of their shorter life expectancy.”

However when the European Court of Justice ruled in March 2011 that this was illegal under EU laws, it mandated a change, which is now scheduled to come into force by the 21st of December, 2012, when insurance pricing becomes “gender-neutral.”

The ABI said its “consumer guidance covers the main insurance products set to be affected by the gender ruling – motor insurance, life, critical illness and income protection insurance as well as retirement products such as annuities and income drawdown.”

It said that “while people will see some changes to pricing, the ABI is urging customers not to focus on price alone, but make sure they shop around and buy products that are suitable for their specific needs.”

Otto Thoresen, Director General at the Association of British Insurers commented: “Insurers and the UK Government fought for nearly a decade to retain the right to offer premiums and benefits priced as accurately as possible by considering risks linked to gender. But now that the battle is over, the industry is focused on preparing to give customers ‘gender-neutral’ rates that are as fair as possible.

“We know that there will be some differences in pricing and this will become clearer as the rule beds in. It is important to remember that gender is one factor of many used by insurers, and we hope our guidance will encourage customers not to focus on price alone, but think about their needs and shop around for products that are most suitable for them.”

Source: Association of British Insurers

Was this article valuable?

Here are more articles you may enjoy.