Government delivers gender certainty

The government has today announced that domestic law is to be amended to deliver absolute clarity for brokers and insurers on when and how the forthcoming European ban on gender-based premiums takes effect.

Any policy contractually agreed and incepted up until 21 December 2012, with gender-sensitive pricing of premiums and benefits, will be allowed to continue unchanged after that date.

Pressure is also being applied to the European Commission to "go further" than simply issue guidance on how the 1 March European Court of Justice ruling in the Test Achats case should be applied, by amending the Gender Directive to give the judgment legislative effect.

And the government has urged the insurance industry to work with it in lobbying the European Commission and Parliament to prevent a future ban on age as an underwriting factor should a similar challenge be mounted.

Financial Secretary to the Treasury Mark Hoban told Post: "We believe insurance companies should still be able to sell policies priced on gender up until 21 December 2012. So we are amending domestic law to reflect that and provide certainty for insurers. There was a lack of certainty arising from the Test Achats case and it is clear from our meetings with the European Parliament and Commission that broadly people share this view across Europe. "

He added: "Although the Commission has agreed to issue guidance on the judgment's interpretation, we want it to go further. What we would like the Commission to do is amend the Gender Directive to give legislative effect to the judgment and provide certainty within the Directive."

In a speech this morning to the London 100 Group, Mr Hoban referred to the Test Achats case as a "burning issue" for all insurers. "As the government has said before, we are extremely disappointed by this decision, but there is no right of appeal. The judgment goes against the grain of a common sense approach to equality. Of course, nobody should be treated unfairly simply because of their gender, but financial services providers should be allowed to make financial decisions on the basis of sound analysis of risk factors, including gender."

While stressing that the UK needs to abide by the ECJ ruling, he added: "This morning I have announced the government's position on the judgment. It is our view that the judgment only applies to new contracts for insurance and related financial services entered into on or after the 21 December 2012. That means any contracts with gender-sensitive pricing of premiums and benefits concluded ahead of that date can continue unchanged after that date."

Asked how government can allay insurer fears that there will be a similar legal challenge on age discrimination, resulting in a ban on its use as an underwriting factor, Mr Hoban told Post: "This issue speaks to the wider agenda. Government, regulators and the industry must work together to lobby the European Commission and Parliament, setting out arguments as to why insurance pricing can be based on age. And we need to make those arguments now. In the UK we already have the Equalities Act, which has agreed financial services products can continue to be based on age. We want the same process to apply in Europe. We must ensure this is legally watertight to prevent the same thing happening."

The change in domestic law will be implemented as soon as the parliamentary process allows. Mr Hoban said: "We have got to go through the proper process and consultation but we will work as quickly as we can. By making this announcement today, we are sending a very clear signal to the industry about our direction of travel."

Read Mark Hoban's speech in full.