With less than 12 months to go before the ECJ ruling on gender discrimination comes into effect, there is still a considerable amount of confusion and uncertainty in the market regarding how insurance companies should respond.
At a recent seminar hosted at our offices in London, we set out to explore the background to the ruling, analyse the legislation and consider how companies should best assess the risks that it presents.
Despite the uncertainty presented by the ECJ ruling, one fact remains clear: it will potentially impact millions of insurance policies worth billions of pounds, and there is a very real risk that insurance contracts could unravel if insurance companies interpret the ruling in the wrong way.
At the heart of the ruling is the concept that premiums and costs for new insurance contracts should not differ on the basis of gender. However, the uncertainty lies in what should be considered a 'new' contract, as the European Commission and HM Treasury are currently providing conflicting guidance around this.
The EC has issued guidelines stating that a new contract includes any amendment to the terms or conditions of an existing contract, as well as a renewal of a contract; but that a tacit renewal is not a new contract.
However, issues of contract law are determined on a national, not Europe-wide, basis. In the UK, HM Treasury has clearly stated in its consultation on the UK response to the ruling that the question will be a matter of UK law – which will not necessarily accord with the Commission's view.
The Commission has provided some guidance on when it considers gender may still be taken into account and although this is very helpful it is just guidance – there is no Court ruling on the issues and the position is still not free from doubt.
To a certain extent, companies are stuck between a rock and a hard place. They have to proceed very carefully, based on a full understanding of the Commission guidance and UK contract law, and decide how they wish to interpret the ruling. A conservative approach reduces the risk of challenge but will have an impact on pricing and, potentially, competitiveness.
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