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Higher insurance premiums and lower annuities for all if the European Court bans gender pricing

British consumers face hikes in the cost of car and life insurance as well as a reduced income in retirement if the European Court of Justice outlaws gender-based pricing of premiums on Tuesday.

"This has been rumbling on since 2004 and Tuesday is the final decision day," said Malcolm Tarling, spokesman for the Association of British Insurers . "If the ECJ rules that insurers can't take gender into account when pricing insurance, then that's it – we have to comply."

Many experts believe that if the ECJ makes that decision, it will have an almost instant effect on premiums. If the ECJ makes the ban retrospective, Mr Tarling says, it would "create chaos for the industry and for clients".

Gender is a factor in almost every car insurance quote. Young men often pay far higher premiums than any other group, reflecting their higher accident rate. Mark Hoban from comparison website Confused.com, said: "If the rules are changed, the result is likely to be a price rise for female drivers, and it's unlikely male premiums will fall, at least in the short term."

According to the AA, some insurers are already adjusting their premiums in anticipation of the ECJ decision. "Some correction is already happening with premiums for young women rising at a faster rate than young men," said Simon Douglas, director of AA insurance.

Matt Morris, of comparison service Lifesearch, reckons an ECJ ban on gender pricing will lead to higher life insurance premiums: "Prices will jump across the board as insurers try to price in the new risk and the cost of changing their systems. Everyone loses here. Insurers can no longer manage risk as effectively and consumers will be stuck with higher premiums. I just hope they don't rule retrospectively. That would create chaos."

At present, insurers use precise longevity calculations to work out how big an annuity – income for life – a pension pot can actually buy. As on average men die four years earlier than women they tend to get a higher annuity income. A ban on gender pricing would end this divide.

"The insurance industry is preparing for unisex annuity pricing as soon as next week," said Laith Khalaf, pensions analyst at Hargreaves Lansdown. "One provider, Living Time, has already moved to unisex, while others have stopped offering new annuities in anticipation of the judgment. The fear is that instead of annuity rates meeting halfway between the current higher levels for men and lower levels for women they will simply sink to the female rate."