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Insurers could cut annuity quote guarantee periods ahead of gender deadline


Pensions providers are considering slashing annuity quote guarantee periods ahead of the implementation of European rules which will ban gender pricing in insurance contracts.

In March last year, the European Court of Justice ruled gender pricing for insurance products will be banned from December 21, 2012.

The ruling, based on a challenge by Belgian consumer group Test-achats, followed an opinion from advocate general Juliane Kokott that using gender as a risk factor when pricing insurance is discriminatory.

The decision will affect the way insurers price annuities, life insurance, income protection and critical-illness cover.

Pension providers offer customers varying guarantee periods on annuity quotes. LV=, for example, currently has a guarantee period of 30 days.

LV= head of annuities Matt Trott says the provider is considering reducing this ahead of December 21.

He says: “A gender specific guarantee period cannot go beyond December 21, so providers have two options. One is to introduce gender neutral prices early and the other is to reduce guarantee periods.

“We are looking at our options and discussing with distributors the best way to deal with this problem.

“Clearly we want to offer customers the best and fairest rates we can, and the most obvious way to do that is to defer introducing unisex rates to as late as we possibly can.”

Legal & General has an annuity quote guarantee period of 18 days.

L&G head of annuities Tim Gosden (pictured) says: “This is an issue we are working through at the moment but we have not made any final decisions yet.

“The key is making sure whatever we decide is communicated properly with advisers and customers.”

The Retirement Partnership director Billy Burrows says: “The most important thing for customers and advisers is that insurers conduct an orderly transition with a clear timetable ahead of December 21.”


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