The ABI represents 90% of the UK insurance industry. It’s spokesman on the EU gender ruling is Malcolm Tarling, and I asked him to explain what’s happening, and why...
Malcolm Tarling: Well from the 21st of December this year insurance companies can no longer take into account gender – in other words, if you’re a man or a woman – when they’re assessing risk. Now this is the European Court of Justice last March brought in a ruling that will specifically ban this, and we think this is bad news for consumers.
Is it something you're in favour of?
Well the ABI argued long and hard against any gender ban as far as insurance is concerned. It’s important for insurers to be have as much relevant information as possible to assess the risk so that they can set premiums and benefits that are fair to all customers now removing gender from the equation is not going to mean the end of the world for UK customers but it will mean in some cases some consumers will see premiums rise and in some cases they may see some of their benefits fall.
Can you tell us which policies will be affected?
Motor insurance policies, life insurance policies and some pension policies will be affected by the ban on gender, for example if you look at motor insurance women tend to benefit at the moment because they are less likely to be involved in an accidents on the roads and therefore their premiums will be less than men.
Life insurance, because women live longer they tend to pay less for their life insurance but the reverse side of that coin is that they tend to get less pension income on average than men.
Is it possible to tell us how much premiums will be affected?
All the insurance companies at the moment are doing their calculations to assess the impact of the gender ban on their business. It’s impossible to say across the board how individual premiums will be affected, because it’s very much down to individual companies to take into account the implications of not being able to use gender where it is relevant.
But I think it’s important to remember that gender is only one factor insurance companies use, they use lots of other factors as well, such as for motor insurance they use your age, where you live, the type of car. Sure, gender will have an impact, but it’s not the only factor insurers take into account, so people shouldn’t be unduly worried by this ban.
So given the importance of gender in the insurance process, can you sum up how things stand now and how things will look in 2013?
What impacts on the price that people pay for their cover is the risk that you represent. That’s the key point that people should remember. Now for some types of business such as motor insurance, pensions and life insurance your gender is important because it can affect the risk.
Insurance companies will not, after December, be able to take that factor into account. But there are a lot of other factors they will take into account, and I think people should not be too scared about this because insurance is a very competitive market. The UK is one of the most competitive markets for insurance in the world.
So if you shop around you can continue to get competitively priced insurance – gender ban or no gender ban.