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Insurers must not distinguish between men and women, says ECJ advisor

Insurers must stop taking a person's sex into account when calculating insurance, an advisor to the European Court of Justice (ECJ) has said.30 Sep 2010

Advocate General Juliane Kokott has said in an opinion provided to the Court that statistics showing different risks for the two sexes cannot justify different treatment of men and women because they do not demonstrate fundamental differences between the sexes.

This is not sufficient grounds on which to justify an exception to the EU's rules on equality of the sexes, she said.

"The exception in question does not relate to any clear biological differences between insured persons," she said. "On the contrary, it concerns cases in which different insurance risks can at most be associated statistically with gender."

EU law prohibits insurers from taking a person's sex into account when creating insurance products or setting premiums. There is an exception to that rule, though, in the EU's Equal Treatment Directive.

Article 5(2) of the Directive says that countries can "permit proportionate differences in individuals' premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data".

The ECJ case concerned complaints made by two people and consumer association the Association Belge des Consommateurs Test-Achats to the Belgian Constitutional Court opposing the implementation of those rules.

Kokott said that the principle of equal treatment of men and women was vitally important. "Strict standards must therefore be imposed in the present case. Differences in treatment could at most be justified by clearly demonstrable biological differences between the sexes," said an ECJ statement outlining her opinion..

The Advocate General said that focusing on sex is not appropriate when so many other factors influence the risks associated with insuring a person.

"Many other factors also play an important role in the evaluation of insurance risks. Thus, the life expectancy of insured persons is above all strongly influenced by the economic and social conditions of each individual, such as, for example, the kind and extent of the professional activity carried out, the family and social environment, eating habits, consumption of stimulants and/or drugs, leisure activities and sporting activities," said the statement.

"The Advocate General takes the view that it is legally inappropriate to link insurance risks to a person’s sex," said the statement. "Differences between people, which can be linked merely statistically to their sex, must not lead to different treatment of male and female insured persons when insurance products are developed."

Kokott said that a person has no control over their sex and that, unlike age, it is not a condition that changes over time.

Kokott advised the Court to declare invalid the provisions allowing for the taking into account
of statistical differences between the risks of insuring men and women when setting premiums. She said it was incompatible with the principle of equal treatment for men and women.

Women are often given cheaper life insurance because on average they live longer and cheaper car insurance because they have fewer and less serious crashes on average.

Kokott said that if her view is adopted by the ECJ it should only apply to future policies and a transition period of three years should be implemented to ensure stability in the insurance sector.

The opinions of Advocates General are only advice for judges at the ECJ, Europe's highest court, but are followed in around 80% of cases.