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GIRO 2011 Cherry Chan and John O’Neill

© 2010 The Actuarial Profession  www.actuaries.org.uk

EU Gender Directive Six Months On
Liverpool 12 October 2011

Agenda
• Background – The 2004 EU Gender Directive – The Test Achats case and the ECJ judgment
• What Happens Next? • People’s Survey • Implications for insurers • Discussion
1

Background Differentiation or Discrimination?
Differentiation • any process in which a mixture of materials separates out
partially or completely into its constituent parts
Discrimination • unfair treatment of a person, racial group, minority, etc; action
based on prejudice
2

Background Press coverage, and actuarial implications

What Europe’s ‘bizarre’ women drivers ruling adds up to

Source: The Telegraph, April 2011

General insurance

• Most press coverage to date focuses on GI initially.

Pensions

Life insurance

Directly impacts DC annuity purchase Much other work currently unaffected... ...but unisex factors etc in due course?

• May be impacted the most!
3

Background Current UK anti-discrimination legislation
• Historically, UK legislation on: – Sex Discrimination (limited impact on insurers?) – Disability Discrimination (more careful implementation of existing practices?)
• EU Gender Directive led to specific amends to Sex Discrimination Regulations (continuation of existing practices?)
• Equality Act 2010 (limited impact on insurers ... so far)
4

Background Equality Act 2010
• Largely consolidates existing UK legislation (Gender , Disability) • Unlawful to discriminate:
– Directly (treat a person less favourably because of a protected characteristic) or
– Indirectly (do something in a way that has a worse impact on people who share a particular protected characteristic)
• 9 protected characteristics:
– age, disability, gender reassignment, marriage, pregnancy, race, religion, sex and sexual orientation
• Ability to differentiate depends on the characteristic • Enabling legislation for guidance on Age Discrimination – GEO
currently consulting
5

Background Current EU Directive (2004/113/EC)

• Aims to combat discrimination based on gender in access to, and the supply of, goods and services

• Unisex rates required but Member State opt out allowed (unless already using unisex rates)

• Applies to new insurance contracts concluded after 21 December 2007 where these are private, voluntary and separate from the employment relationship

• Pregnancy and maternity related costs cannot be reflected in premiums or benefits

• 5 year review (originally) due at end of 2010 with Member State review of opt-out to follow by 21/12/2012

• Implemented differently across Europe

6

Background Current EU Directive (2004/113/EC): Opt-out clause
• Article 5(2) allows Member States to permit differences related to sex in respect of insurance premiums and benefits: – Where gender is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data then proportionate differences in individual premiums or benefits are allowed – Data must be compiled, published and regularly updated
7

Background Current EU Directive: Use of Opt-out clause
All 26 countries availed of the opt-out clause: • 13 for all types of insurance (incl. UK) • 9 countries do not allow gender to be used for motor • 4 countries do not allow gender to be used for accident • Several countries allow only for selected classes:
– Belgium – Life/annuities only – Cyprus – Life/annuities/accident only – Norway – Life/annuities/disability only

© 2010 The Actuarial Profession  www.actuaries.org.uk

Source: Groupe Consultatif

8

Background Current EU Directive: Data Publication

• Prescription over published data varies considerably • Bodies involved in publishing data also vary:

Who publishes data? Government Department Insurance Regulator National Agency Actuarial Association Industry Association Individual companies Other
© 2010 The Actuarial Profession  www.actuaries.org.uk

Frequency 4 11 8 7 8 7 1

Source: Groupe Consultatif

9

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