Insurance Market Hit as Gender Equality Enforced

A number of insurance providers saw huge boosts in insurance purchases in December 2012 figures have revealed. In the three months lead up to the 21st December, Bright Grey and Scottish Provident have both reported huge increases in purchases of critical illness, income protection and life insurance policies.
The reason for this rise in purchases is because 21st December 2012 was the day all insurers across Europe could no longer take gender into account when calculating an applicant’s insurance rate or benefits. This is the result of a European Court of Justice (ECJ) ruling that gender exemptions by insurers ran counter to the wider principle expressed and exercised for gender equality.
The ruling has affected car insurance, life protection, private medical insurance, income protection, and annuities (pension income).
As a result of this providers such as that Bright Grey and Scottish Provident experienced a rush of policy applications as people looked to get the best possible deals. They reported a rise of 27% and 25% respectively in the number of policies started in December 2012, compared to December 2011. With regards to life policies, Bright Grey saw a rise in 19% and Scottish Provident 58%. Furthermore, of the number of women buying life policies,  Bright Grey had 52% more requests than 2011, while Scottish Provident saw a massive 92% rise in female applications for policies compared to December 2011.
Similarly, Assureweb experienced record high activity on the 20th December as customers scrabbled to get the best deals. It recorded 786 applications for insurance, the most in a single day since the company started in 1995. It reported a rise of 68% in annuity requests from November 2011 to 2012, and Whole of Life policy applications rose by 72% over the this time period as well.
Now the legislation has come into force and insurers gradually align their policies to unisex, many expect certain groups to be forced to pay significantly more or less. For example, young female drivers should expect their rates to go up while male drivers should see theirs fall. On the other hand, men looking to get a retirement pension income could miss out on up to £10,000 over their retirement lifespan. This is because as men have generally been paid 4% more in the past than women in their annuity due to their shorter life expectancy, according to predictions by PricewaterhouseCoopers.
As gender is removed from the consideration process, many insurers will have to start looking at age, lifestyle and medical histories in order to better determine insurance rates for applicants. While in certain areas rates can be predicted, how this legislation will impact the wider market once prices are completely aligned, it is still too early to tell.