Extract from the Quarter 4 - 2012 Edition of Bandwagon
Bandwagon The BWCI Group Newsletter
Gender-Neutral Pricing
“Insurers can also
continue to offer
gender specific
insurance products”
Brett Pickett
Background
On 1 March 2011 the European Court of Justice
(“ECJ”) confirmed that insurance companies
would not be able to use gender to determine
insurance benefits and premiums from 21
December 2012 onwards. The ruling applies
to new contracts and on 22 December 2011
the European Commission (“EC”) published
guidance to help insurance companies
implement unisex pricing requirements in the
EU.
Definition of New Contract
What constitutes a new contract is a potential
grey area. Fortunately the EC has provided
explicit guidance and states the following
should be considered as constituting a new
contractual agreement.
ontracts concluded for the first time as
 C
from 21 December 2012
 A
greements between parties as from
21 December 2012 to extend contracts
concluded before that date which would
otherwise have expired
The guidance also clarifies that the following
would not be considered as constituting a new
contractual agreement.
 T
he automatic extension of an existing
contract
he adjustments made to individual
 T
elements of an existing contract on the
basis of pre-defined parameters where the
consent of the policyholder is not required.
For example, a premium increased by a
percentage based on the claims experience
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 T
he taking out of top-ups or follow on
policies by policyholders, where the terms
were pre-agreed in contracts concluded
before 21 December 2012 and these policies
are activated on a unilateral basis by the
policyholder, for example when the amount
invested is increased by the policyholder
Allowable Gender-Based Practices
Insurance companies can continue to use
gender as a risk factor at the aggregate
portfolio level, provided it does not lead to
differentiation at the individual level. For
example, insurers can continue to collect, store
and use gender status for:
eserving and internal pricing - data can be
 R
collected to determine technical provisions
and monitor the portfolio mix from an
aggregate pricing perspective
 R
einsurance pricing - so long as it does
not lead to pricing differentiation at an
individual level
 M
arketing and advertising - to influence
their portfolio mix
 L ife and health underwriting - certain
physiological differences between men
and women can continue to be taken into
account
Insurers can also continue to offer gender
specific insurance products (or options within
contracts) to cover conditions affecting a
specific sex (e.g. prostate or breast cancer).
Use of Other Risk-Rating Factors
Insurers can still use factors which are
correlated with gender provided they are true
risk factors in their own right. They can also
continue to use other factors, such as age and
disability.
Action for Insurers
All EU insurance companies will have to put
in place appropriate steps to comply with
the ECJ ruling and the consequent guidance.
Procedures will need to cover the management
of existing contracts (where some continuation
of current terms may be possible) and ensuring
that new contracts are fully compliant.
he transfer of a policy or policies between
 T
insurers
Insurance and Occupational Pensions
The EC has confirmed that insurers can
continue to use gender to assess risk if
it relates to an arrangement made by an
employer for its employees, as a consequence
of their employment. In addition, different
levels of benefits between men and women are
allowed when justified by actuarial calculation
factors.
However, if the employer is not party to a
contract between an insurer and an employee
then the contract falls under the Test-Achats
ruling and gender-neutral pricing is required at
the individual policyholder level.
Futher advice
For further advice on this subject and in
particular the steps that insurers need to
take to comply with the ECJ ruling, please
contact Brett Pickett on +44 (0)1481
728432 or at [email protected].