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What you need to know about gender neutral premiums
Summary of what’s happening.
In 2004, the Gender Directive was introduced with the aim of ensuring equal treatment of men and women in relation to the access to, and the supply of goods and services. For insurance and related financial services, the directive required that where contracts are concluded (entered into) on or after December 21st 2007, gender cannot be used as a factor that results in differences in individuals’ premiums and benefits (“the unisex rule”).
However, article 5 of the Directive gave an option to countries to apply derogation from the unisex rule. This would allow insurers to continue to use gender as a rating factor to set premiums or benefits, provided this was based on “relevant and accurate actuarial and statistical data”. Many EU countries applied this derogation for most lines of insurance business.
What is the EU Gender Directive?
The EU Gender Directive implements the principle of equal treatment between men and women in access to the supply of goods and services. This includes insurance and other financial services. It states that after December 21st 2007 (when the Gender Directive first came into effect) the use of gender as an actuarial factor should not result in differences in individual’s premiums or benefits.
Who will be affected?
Anyone that takes out an insurance policy after December 21st 2012 will be affected to varying degrees.
It is expected that women will receive a 15% increase (according to the HM Treasury Consultation Document, December 2011) in their life insurance products however this can be avoided by taking out a policy prior to December 21st 2012.
Men will also see changes with their policies. While their increase will not be as high as it is for women, they can expect to see a slight rise in all personal insurance products.
Ultimately, it will all depend on the product, the length of cover and other risk factors (such as age, weight, smoking status) as to how much you will pay.
What do I need to do?
If you are currently looking, or even just considering getting a personal insurance product, the time to act is now.
By taking out a policy prior to the 21st of December 2012, you will be able to avoid the unnecessary price rise by having your premium take into consideration your gender.
What about my existing policies?
Existing policies are less likely to be affected, although if they are reviewed or renewed there may be an impact on the level of future premiums or benefits as they may be calculated on the new gender neutral pricing rates. In some cases changes to existing policies may also need to be on the new rates. If you already have an existing personal insurance policy, Lifebroker are able to compare this to what is available on the market now, ensuring that you have the best policy for your individual circumstances.
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