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Government explains how it will
apply ECJ gender ruling
28 July 2011
by Emma Jamieson
In March, the
European Court of Justice (ECJ) in the 'Test-Achats' case, ruled to ban
the use of gender in determining the car insurance premium, effective from 21
December 2012.
Thus,
young women that currently enjoy a lower car insurance
premium because they are twice as safe as young men behind the wheel
will be grouped together with them and will exprience a price
hike in their car insurance premium,
according to the British Insurance Brokers' Association (BIBA), of
25-50%.
 The
Government has been critical of the ruling with Mark Hoban (pictured),
the Financial Secretary to the Treasury, diplomatically saying that it
was crazy by stating: "The judgment goes against the grain of the
common sense approach to equality which the UK government wants to see."
Certainly, when you look at the much higher incidence of dangerous
driving behaviours exhibited by young men (as recorded by
police at accident scenes) and when you take account of a
body of actuarial data based on millions of accidents world-wide, it is
much more pertinent to argue that the new
gender arrangements will be more discriminatory than those they
replace.
However, the Government sees no wisdom in appealing the ECJ decision
and Mr Hoban confirms that they will amend the Equality Act 2010 to
take account of the ruling.
He clarified that the ruling will be interpreted here to apply only to
new policies after the start date. Thus, a young woman buying her car
insurance on 20 December 2012 would still benefit from a full year
under the old arrangements. Hoban stated that "any contracts with
gender-sensitive pricing of premiums or benefits concluded ahead of 21
December 2012 can continue unchanged after that date".
This would seem to suggest that if a young woman's car insurance
renewal date was after this date that she could still benefit from the
old premium calculation arrangements if she arranges her car insurance
(so concluding the contract) before the December cut-off. Thus, even
where the car insurance does not need to be renewed until, say, March,
she should aim to buy it before 21 December to avoid a price hike.
That said, when the detail of how the reform will be implemented is
determined and made public, a maximum delay period before the new
policy must commence will need to be stipulated, otherwise there would
be no barrier to concluding a contract on cover that will commence
several months or even years into the future.
The Government will be working with other EU countries to try to ensure
uniformity of implementation and it is anticapted that other EU members
will take the same approach whereby the ruling will only effect new car
insurance 'contracts' concluded after 21 December 2012.
Hoban admitted that he was disappointed that the European Commission
had no plans to amend the gender directive itself.
Currently article 5(2) of EU Directive 2004/113, allows for
differential insurance pricing where "use of sex is a determining
factor in the assessment of risk based on relevant and accurate
actuarial and statistical data".
As Hoban says: "the text of the directive [is] inconsistent with the
court's decision" and he plans to work with other EU countries to bring
about the necessary ammendment to Directive 2004/113.
Hoban did welcome the fact that the European Commission (EC) would be
issuing guidance on the judgement and its implications for member
states. He also confirmed that the government would be pressing the EC
for early release of this guidance to help service providers, including
car insurance companies, to prepare for the change.
Clarification as to exactly what constitutes a new contract will also
be required. For example, if a young woman car insurance policy holder
changes her car shortly after the December start date and she ammends
her policy with her existing
insurer to cover the new
car, is this
to be treated as a new policy or an adjustment to the current one?
It
remains to be seen how effectively confusion can be dispelled in
advance of the start of the new ECJ gender ruling at the end of next
year. There is a tendency for EC guidance to be released close to the
start date of legislative changes and in a form that does not always
lend itself to determining exactly what is needed 'on the ground'.
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