The decision has been made by the European Courts that from the 21st of December 2012 onward, premiums must no longer be subjective to gender. This ruling applies to all forms of insurance, with the impact on PMI predicted to be negligible.
Industry feared that the ruling would demand that the changed be enforced immediately, but with the date set over a year away, insurance companies can prepare for the changes.
Speaking to COVER, Lindsey Joseph, executive committee member for the Association of Medical Insurance Intermediaries (AMII), added that she saw a way forward in more sophisticated underwriting.
“The vast majority of PMI providers does not have premiums for gender and for those that do the difference in premium is not particularly significant. For those few with older policies on the books they will need to be adjusted, and in those circumstances we recommend specialist advice.”
It is essential for insurers to use gender to calculate risk based premiums 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 effect of the European Court of Justice (ECJ) ruling on the private Medical Insurance sector is likely to be “negligible” according to an industry body.
AMII has noted an opportunity for an increase in the medically based underwriting within the protection sector. Joseph said: “The advocate general said you cannot differentiate based on gender and the stats that support that.
Will premiums increase across the board to suit insurer’s needs? Or will they mediate the premiums to create a middle ground unopposed by gender? We’ll be keeping a close eye on this subject.