Introduction
This Directive prohibits discrimination based on gender, in the provision of goods and services, including insurance. Gender-based differences in insurance pricing are prohibited unless they can be objectively justified within specific classes of insurance. The Directive was passed in December 2004.
Key issues
The Directive’s Article 5 provides Member States with two options:
- To ban all differential treatment based on gender in the provision of insurance products; or
- To allow gender-based treatment, subject to conditions about the relevance and accuracy of the data on which the differences are based, and about the publication of gender-related data.
The UK Government transposed the Directive into UK law through the Sex Discrimination (Amendment of Legislation) regulation 2008, which came into force on 6 April 2008. The Regulations follow the second of the above options, so where there are proportionate differences in an individual’s premiums and benefits as a result of sex being a determinant factor in risk assessment, then these differences must be based on relevant and accurate data, and this data must be compiled, published and regularly updated.
The Association of British Insurers and Continuous Mortality Investigation have published gender data tables covering motor, private medical, life, critical illness and income protection insurance. Lloyd’s syndicates contributed to the collection of this data, which shows the relevance of gender in the insurance underwriting process. The Directive requires Member States to review their decision to allow this exemption by the end of 2012.
In the Lloyd’s market, the Directive has most impact on motor and life insurance.
Other Member States have implemented the Directive without the “opt out”, so that gender cannot be used in any circumstances as a rating factor.
Pregnancy and maternity
The final part of implementation of the Directive applies to insurance contracts issued after 21 December 2008. For new contracts after this date the insurance exemption will not permit "costs" related to pregnancy or maternity to result in differences individuals' premiums and benefits. In the UK, this requirement has been implemented via Section 45 (3)(a)(iv) of the Sex Discrimination Act.
Arguably costs in this context covers any difference in premium or benefits that anticipate possible additional costs of claims for pregnancy related illnesses or incapacity. Maternity for these purposes includes women who have had a baby in the last 6 months. It would seem that the exemption cannot therefore be used to pass on any additional costs of pregnancy or childbirth to women only and that such cost will need, going forward, to be spread across policyholders as a whole.
This is consistent with the EU directive (paragraph 20 of the preamble) which states that: “less favourable treatment of women for reasons of pregnancy and maternity should be considered a form of direct discrimination, based upon sex and therefore prohibited in insurance and related financial services. Costs related to risks of pregnancy and maternity should therefore not be attributed to the member of one sex only”.
Implementation
The directive was due to be implemented by Member States by 21 December 2007.
Not all Member States have implemented the Gender Directive.
Further information
Download the Gender Directive (PDF, 58,5KB)
Newsletter article ‘Sex and the City – the Gender Directive and insurance’ was published in Worldwide Compliance - winter 2007 edition.
