In 2011 the European Court of Justice ruled that it is now illegal discrimination to use a persons gender to calculate the price of an insurance policy. This new directive came in to force in the United Kingdom on the 21st of December 2012 and basically means that insurance companies within member states of the EU are banned from considering gender when pricing their plans. This will affect car insurance, life/critical illness, private medical insurance (PMI), income protection and annuity plans. As a general principle women are primarily affected as due to a variety of factors, they tend to claim less on most types of insurance cover and so their premiums historically have been lower.
Looking at the types insurance classes that we advise our clients on at Premier Choice, at the moment life assurance plans are generally cheaper for women because on average they live longer so are less likely to claim in most areas of life and protection cover. There is also a small effect on private medical insurance. Most PMI insurers have not rated based on sex but there will be some changes for a couple of the larger medical insurers, both Aviva and PruHealth have taken gender into account in recent years on some of their plans.
The above detail is all well and good but how are the changes going to practically affect consumers in the UK and more particularly the advice that we give clients at Premier Choice Healthcare?
In the rest of this article we’ll take a look in brief at the stances taken by the market and give an initial feel for how the health and life insurance sector is implementing the new rules.
For life insurance one industry commentator expects fairly substantive rises for women of up to 30% (According to Which*) in some cases. Although industry guidance from the government** suggests a less scary 15% increase. Interestingly, in the case of income protection the situation could be reversed as women generally claim more their rates could fall and those of men will rise. As a general principle where life insurers are putting up prices on new business they are being relatively tight lipped about the level of increase but for life and most protection type policies women can definitely expect to see higher premiums when taking out a new policy. It is likely though that existing policies shouldn’t be affected unless the plan has a review period (often after five or ten years) built into the contract. If this insurer practice changes we will cover it in one of our news articles and of course speak to clients as they are affected in the future. I would stress though that sufficient life cover for our clients remains an essential consideration and rates are still historically very low.
On the private medical insurance side of things PruHealth stopped using gender as a rating factor in 2011 so new business will be unaffected but renewals from the 21st of December onwards may be affected for another 12 months. Aviva decided to go gender neutral for all new business and renewals/mid term adjustments from November of last year. Generally rating changes for women are unlikely to be too extreme in the PMI sector and in the case of these two insurers as premiums are equalized prices may rise slightly for younger men but fall for younger women – then this position effectively reverses as clients get older. However, one key fact to remember is that most other insurers have been and will remain gender neutral. So it is vital to consult Premier Choice Healthcare at renewal – we will do a comprehensive check against the whole of the market to ensure that you aren’t paying too much for your plan in 2013. If we judge there is a deleterious effect for you there are lots of other insurers to consider (if you’re able to make a continued medical exclusions switch to a new insurer).
So there will a number of interesting changes in coming months and the goal posts will inevitably continue to shift in 2013 and the beginning of 2014. Please keep checking back at the news section of the Premier Choice website where we will update you as major changes happen. In addition as your life or health cover renews your local Premier Choice Healthcare consultant will be in touch to discuss the implications of any on-going price changes and how you might be affected.
Cited Resoures :
- * Which Article – http://www.which.co.uk/money/insurance/guides/insurance-gender-discrimination-rules/gender-directive-and-protection-insurance/
- ** HM Treasury Consultation Document, December 2011