European Parliament Votes to Ban Gender Discrimination in Insurance Products

April 6, 2004

The European Parliament, the legislature for the European Union, has voted to prohibit gender discrimination in calculating premium rates for the sale of insurance products.

The proposal first surfaced in May 2003, and was formally introduced last December. It drew a decidedly mixed reaction, with opponents from the industry attacking it as a muddled exercise in political correctness, which would result in significant premium increases.

One of the main groups affected would be women drivers, who could see their rates increase to the level of those now normally charged their male counterparts. Women normally pay less for their auto insurance throughout the EU, as they have consistently better driving records. Insurers have said that the overall approach would end up hurting consumers in general.

The European Commission, the EU’s regulatory authority, has indicated that it feels the proposal would increase market access for women. However, organizations such as the Association of British Insurers, have pointed out that it could well have the opposite effect, raising the cost of motor and life insurance for women.

According to news reports, Norwich Union, Aviva’s P/C insurance division, said it was disappointed that the parliament hadn’t considered amending proposals on insurance regulation to remove the gender discrimination provision. A company statement indicated that “the use of gender in the calculation of insurance premiums is not discrimination but a fair recognition of objective risk; premium differences between the sexes are based on actuarial statistics and actual claims experience. Forcing insurers to ignore gender when pricing risks would mean introducing an unfair element of cross-subsidy into the provision of insurance services.”

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