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Contact Us Professional News - January 2012
Government consults on insurance ruling
The government has launched a new consultation on a European Court of Justice (ECJ) ruling with significant implications for annuity payments.
The ECJ ruling means that, from 21st December 2012, insurers will no longer be able to take a person’s gender into account when pricing insurance.
As well as increasing the cost of motor insurance for young female drivers – who currently pay less for policies because they are less likely to have accidents, thus making fewer claims than men – the decision is set to cut annuity payments for men. Historically, men have received higher payments than women to compensate for the fact that they do not live as long.
Research commissioned by the Association of British Insurers (ABI) has previously suggested that removing gender as a risk factor in pricing insurance could result in annuity rates falling by eight percent for men approaching retirement age, compared to a rise of six percent for their female counterparts.
While the government has already stated that it believes the judgement applies only to new contracts, it is seeking views on this legal interpretation. The consultation also requests additional data to examine the impact of this legislation on consumers and insurers.
Finally, it requests views on some of the key issues arising from the judgment, such as the scope of indirect discrimination.
Announcing the consultation, Mark Hoban, the Financial Secretary to the Treasury, said: "While nobody should ever be treated unfairly because of their gender, financial services providers should be allowed to make sensible decisions based on sound analysis of risk.
“We continue to work hard with other Member States and the Commission to secure legal certainty for industry and reduce any detrimental effects for consumers.”
Any interested parties have until 29th February 2012 to comment.
Anyone considering purchasing an annuity after the December deadline should contact MT Financial Management on 01775 717220 for more information.
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