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FSA and the Treasury fight Euro court gender verdict

The FSA and the Treasury have challenged calls from the European Court of Justice to ban the use of gender to price products.

Women benefit from cheaper life insurance premiums and men get higher annuity payments based on women’s lower mortality risk.

Insurers and annuity providers are allowed to operate the different charging structures for men and women under an opt-out clause of the EU gender directive, as long as this is based on actuarial and statistical data.

But an opinion statement by advocate general Juliane Kokott at the EU Court of Justice last month called for a ban on the use of gender to price products on the grounds of gender discrimination.

The FSA argues such a move would not be appropriate and says it has the Treasury’s backing on this issue as well.

In a newsletter on life insurance published last week, FSA insurance sector director Ken Hogg says: “The advocate general’s opinion is that the opt-out should be annulled, however, this is not binding and we must wait for the court’s final judgment early next year.

“Our position, which we have reaffirmed with HM Treasury, is that the use of gender as a rating factor is appropriate when based on and supported by relevant actuarial and statistical data. This is in line with current UK gender legislation and the EU gender directive.”

The Association of British Insurers and providers have already expressed concern that if this opinion were to be written into law the impact on the market would be significant, causing the price of insurance and annuities to be distorted.

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