The European Court of Justice in Luxembourg has ruled that using differences between men and women as a risk factor in setting premiums for car and medical insurance and pension schemes breaches EU rules on equality.
"Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination," the court said in a statement.
The verdict - which applies from December 21 2012 - will force changes in the current standard practice across Europe of basing insurance rates on statistics about differing life expectancies or road accident records of the sexes.
Women could face a jump of 25pc in car insurance premiums in light of the decision, while pension income form men could fall by between 5 and 10pc.
Men benefit from higher annuity rates as, statistically, they don't live as long as women. Currently men aged 65 get an income of £3,274 a year from a £50,000 pension fund, and women £2,993. In comparison, the unisex rate is £3,049 (certain types of pension already apply unisex rates)...
Matt Morris, senior policy adviser, at LifeSearch said: “This is a horrible mistake by the European Court. It is essential for insurers to use gender to calculate risk based on solid actuarial evidence and statistics. It is price differentiation, not discrimination, as it is not a decision that comes down to the whim of an individual. The consumer will now suffer. Prices will go up across the board as insurance companies try to build in the new risk.”..
Conservative MEP Sajjad Karim also condemned it as “utter madness” and a “setback for common sense”.
02 March 2011
Gender equality vs. actuarial statistics
The European Union Court of Justice doesn't think it's fair that women and men should be charged different rates...
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The price difference in car insurance always struck me as unfair...
ReplyDeleteWhat if i did some statistics on black and white people and look at who has most accidents? If there is a statistical difference, does that make it alright to use that as a base for "price differentiation"?
@ March 2, 2011 5:19 PM
ReplyDeletedo you believe that:
...if you did some statistics on black and white people and look at who has most accidents...
the difference would be statistically significant???
http://en.wikipedia.org/wiki/Statistical_significance
In my opinion the European Union's institutions are as usual trying to solve academic exercises rather than dealing with the actual challenges they need to address.
To the extent that government (especially ours) has any power or place to be regulating such things, shouldn't it be focusing on discrimination based on, you know, hatred instead of discrimination based on math?
ReplyDeleteThe actuarial tables are more or less based on statistical analysis, not an expression of hatred.
Where does such equality enforcement stop? If we're going to play the gender card, then I'm going to play the ageism card. Should insurance companies not be allowed to price according to age as well?
Nothing shocking here; the statists of Europe have always put ideology before reason, and an empty ideological victory at the expense of entrepreneurs is a double win to socialists.
ReplyDeleteAnon, I don't know where to begin to educate you on this. Insurance is based on risk and the minimization of risk to keep costs down.
Don't confuse the need of businesses to differentiate for economic calculation with the the immorality of state mandated discrimination.
If one business fails to serve the needs of a particular group (say, young black males being charged more for insurance) another business can specialize in serving that need at a viable rate.
When governments discriminate like this it is a problem because governments hold legal monopolies on the services that they provide, so no competition can rise up and serve that need. That is why this same behavior would be immoral to a state.
@Anonymous March 3, 2011 2:28 AM:
ReplyDeleteWhat you call socialism, most of Europe probably considers centrist. As far as I can see, some people will spit the "socialist" label at anything liberal or community-oriented with which they disagree.
As a fiscal conservative/social liberal, I found this odd but understandable. Europe tends towards a model of not punishing people for limitations of birth. So even if you are born poor, you should not have to forgo healthcare or free university education. We are also acutely sensitive to our past failings to ensure equality and can sometime over-react, though I don't think this is one of those occasions.
I do not see this as an assault on entrepreneurs or on business. The European model is arguably more open and more capitalist than the American one - this is backed up by independent assessments which rank EU countries very highly in terms of ease of doing business, access to labour, government regulation, etc. Movement of labour and capital is much easier in Europe, and our localisation of taxes is less complex. We also avoid the burden of healthcare costs and student loans which the US foists on both workers and companies.
You write "If one business fails to serve the needs of a particular group (say, young black males being charged more for insurance) another business can specialize in serving that need at a viable rate." While this is nice in theory, it is not always the case. Often, a company will squeeze such groups and force some of them to go without insurance. I've seen this as a young man, with insurance quotes that were multiples of my female friends. It caused many of my male friends to either drive without insurance or get huge loans.
I know it is abhorrent to many fiscal liberals, but I don't think it's a victory for socialists or statists so much as young guys like me!
@Anonymous
ReplyDeleteAnon, we've sadly reached the limitations of this medium of discussion, but I certainly appreciate your civil tone. I will try to keep my rebuttal brief, though it will undermine clarity.
"Centrist" is a useless term; it merely indicates a supposed median of opinion, which is itself attached to a useless linear scale.
Socialism takes money from some and gives it to others via government's monopoly on coercion. The degree and justification of taking have no bearing on the nature of principle. Pillaging is pillaging, whether legal or illegal, and regardless of the financial situation of the pillager and pillaged.
When you speak of "foisting" and "forcing" the premise is that goods are rights. Education is a good, insurance is a good, and indeed medical services are goods. The rights that you imply then are the "right" of some to take the wealth of others. This is textbooks socialist dogma, whether you label it as such or not. The "right" of some to live on the life product of others is best identified as slavery. What is wrong for one person to do is wrong for many to do, in the name of charity, or social justice, or anything at all. Theft, coercion, and fraud are always wrong.
You sound a decent and bright fellow; I would recommend that you make an inquiry into Austrian economics (if you have not already been biased against it by your educational commissars).
@Anonymous March 4, 2011 6:15 AM:
ReplyDeleteSadly, I have long been brainwashed by the evils of universal healthcare, education, etc. Woe is me.