Brussels drops plan for unisex insurance

The European Commission is set to back down over controversial plans to ban insurers from gender discrimination when setting insurance premiums and annuity rates, following a backlash from the majority of its member states.

The European Commission is set to back down over controversial plans to ban insurers from gender discrimination when setting insurance premiums and annuity rates, following a backlash from the majority of its member states.

At a private meeting to debate the proposals earlier this month, senior representatives from 17 of the 25 member states voted against the controversial measures included in the gender discrimination directive, which is currently passing through the European Parliament.

The proposals, which were first laid down last year, would have banned insurers from offering cheaper motor insurance to women, who are charged lower premiums because they are statistically better drivers.

Premiums for young women between the ages of 17 and 25, for example, are up to £500 a year cheaper in the UK than those for men of a similar age.

The proposals would also have prevented men being offered higher annuity rates because they have shorter life expectancies. The news will come as a great relief to Britain's insurers, who had expressed concerns that the rules would have cost the insurance industry hundreds of millions of pounds, sending premiums soaring.

In the case of annuity rates, insurers said that any benefit women might have received from the elimination of gender discrimination would have been more than offset by the increase in the costs caused by inefficient pricing. Jacqui Smith, the deputy minister for equality and women's issues, who attended the meeting on behalf of the UK, said the Commission would now be unable to pass the insurance proposals without a protest from the majority of its members. She said: "What was clear at the meeting was that there were many other states that also expressed concerns about the prospect of banning actuarial gender calculations from the insurance industry.

"We strongly support the idea of a gender discrimination directive, and we support that it should be applied to financial services in some areas. For instance, there are parts of Europe where a woman has to ask her husband if she wants to take out a loan. Obviously we don't support that. "But we do support a position where you can differentiate between genders if there is up-to-date factual evidence."

A spokeswoman for the Association of British Insurers, the industry's largest trade body, said she welcomed the news. "The effects on consumers of this directive could have been very damaging," she said. "Risk pricing helps insurers provide the best possible and fairest service at the keenest prices. Clearly, the vast majority of member states have been listening to the voice of the industry and we're becoming more hopeful that the commission will take a sensible decision on the directive."