Currently differentiations between men and women, such as life expectancy and road accident records, are used as a risk factor when setting premiums for medical and car insurance and pension schemes. However, the European Court of Justice in Luxembourg believes this system goes against the EU rules on equality and “constitutes discrimination.”
The new verdict will be applied from December 2012 and women can expect to face a 25 percent increase in car insurance premiums whilst pension income for men may fall by 10 percent.
As men statistically do not live as long as women, they benefit from higher annuity rates. With some pension schemes already applying a set rate for both men and women, the unisex rate for a £50,000 pension fund is £3,049 a year, whilst men currently get an income of £3,274 a year and women £2,993.
The new ruling has received criticism from experts who believe premium prices are likely to be volatile over the next few months, with Conservative MEP Sajjad Karim condemning it to be “utter madness” and a “setback for common sense.”
There are also fears that some car insurers might set the unisex level at the male rate and younger men who will save on insurance may spend the savings on faster cars meaning claims for the ‘younger driver’ group will be pushed up further.
The new ruling will undoubtedly have an impact on women, who are already struggling with rising prices of consumer goods, but the EU saw the price differentiation system as constituting discrimination. It appears, however, that the new ruling will carry far more many problems than just higher prices.
For more information, please visit www.glazers.co.uk
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