Pension providers are braced for a lengthy battle with European officials after EU advocate-general Juliane Kokott said that insurance companies should not charge different rates for men and women.
Currently, insurance companies, including annuity providers, are legally entitled to charge different prices for products, provided they are based on analysis of the risks associated with different types of individual.
Money Marketing reported last week that European Court of Justice adviser Kokott had published an opinion statement suggesting that gender represents one of a number of factors which have an impact on risk and, as it is not under a person’s control, it is inappropriate to use it as a consideration in determining the cost of an insurance product.
Royal London group head of communications Alasdair Buch-anan says the advocate-gen-eral’s comments represent an “unwelcome diversion” for life and pension providers.
He says: “If this idea is being considered seriously – and it looks as though it is – it would cause significant distortions in the market. Obviously, for people in life and pensions, the annuity purchase issue is the most significant. How far does this go? Should we also look at age discrimination? Should everyone have the same age premiums, regardless? It seems amazing but this could damage the market quite significantly.”
Although Kokott’s statement only represents an opinion at this stage, Mercer head of regulatory research group Deborah Cooper says the ECJ rarely countermands initial opinions.