UK: Doubt as to Whether Sex Discrimination in the Insurance Industry is to be Outlawed

Last Updated: 7 January 2005
Article by Pollyanna Deane and Fiona Russell

Originally published in the summer edition of BLG Insurance Law Quarterly

In November 2003 the European Commission presented a proposal for a Council directive (the ‘‘Draft Directive’’) on equal treatment for men and women outside the workplace.


The Draft Directive prohibits discrimination in the provision of goods and services made available to the public in return for payment. It will not apply to transactions which are carried out in a purely private context such as the letting of a room in a private house. There will be an exemption for certain goods and services for example where a good or service was intended exclusively or primarily for members of one sex (such as female only sessions in a swimming pool or a single sex private members club) or where the skills required for its delivery were different for each sex (such as hairdressing).

Where people believe that they have been the victim of discrimination they will be provided with the possibility of pursuing their claims through an administrative and/or judicial procedure to enforce their right to equal treatment.

The Draft Directive confirms that Member States may maintain or introduce specific measures to compensate for certain disadvantages suffered by individuals of either sex in the field of goods and services. Such measures must be shown to be necessary, focused on overcoming a specific disadvantage and must be limited in time, being in force no longer than is necessary to deal with the problem identified. For example women have traditionally had greater problems than men starting businesses as a result of a range of factors, including the difficulty of raising venture capital and getting support for the development of business ideas. As a result special services for women entrepreneurs exist in a number of Member States. The European Commission believes that this directive should not prohibit the possibility for such measures and therefore the Draft Directive includes an option for Member States to provide for this derogation from the principle of equal treatment. The absence of this option would also prevent responses to new needs for positive action which may arise in the future.

The Draft Directive does not apply to the content of media and advertising or taxation. It is the Commission’s view that the issue of sexual discrimination and sexual stereotyping in the media cannot be tackled by this Draft Directive as social attitudes cannot be changed by legal text. In respect of taxation, existing European law requires the taxation of income from employment to respect the principle of equal treatment and therefore the Commission believes that there is no need to intervene further.


The proposal combats sex discrimination whether against men or women. The text of the Draft Directive explicitly refers to the issues of premiums and benefits in the insurance sector under article 4. Article 4 proposes that the use of sex as a factor in the calculation of premiums and benefits be prohibited. Equal treatment for women and men is a fundamental right and the European Commission believes that the freedom to set insurance tariffs must be subject to that right.

All insurance is based on the pooling of risk and insurers decide for themselves how they wish to define the pool of risk. Many divide men and women into separate pools meaning that the risks they face are not shared. The European Commission has taken the view that the separation of men and women into different pools leads to an unjustified difference of treatment and a resulting disadvantage for one sex or the other. For example in a majority of cases, women either pay higher premiums for pensions and annuities or their plan pays out less per year. This is justified by the insurance industry on the grounds that women live longer. The European Commission has stated that studies have shown that there are a number of factors that are not linked to sex which are equally important in establishing life expectancy such as socio-economic or marital status, the region the person lives in or level of smoking. When these factors are removed from the equation, differences in life expectancy on purely gender grounds are much less than stated and the difference in life expectancy between men and women can be between 0 and 2 years. This leads to the conclusion that differences in life expectancy are not purely biological. In some Member States (such as the UK) a distinction between the sexes is made in motor insurance, with men paying higher premiums. Again there are a number of factors other than sex which play a role. The European Commission has proposed that differences in treatment based on actuarial factors directly related to sex are discriminatory and should be abolished.

In the health insurance sector women are often charged a higher premium on the grounds that there is a likelihood that they will become pregnant and give birth, with associated cost implications. This, in the European Commission’s view, is another case of discrimination because the benefit derives to society as a whole but the costs are borne by one section of society alone. In addition, these conditions are often excluded from health insurance cover altogether.

However it has been reported in the UK national press (see The Daily Telegraph dated 14 June 2004) that the EU may be forced to drop its proposal to outlaw discrimination in the calculation of insurance premiums and benefits. It has been reported that at a meeting held in Brussels in early June, 17 of the 25 Member States called for insurance to be excluded from the Draft Directive. The UK were among those opposing it. The UK insurance industry will be pleased with this result because there are fears that the proposals will lead to all policyholders having to pay more for insurance in order to fund the massive overhaul of the way insurers calculate premiums and benefits. While the European Commission stated that it was sensitive to the industry’s concerns, giving it 6 years to implement the changes, nevertheless it unsurprisingly was not proposing any other transitional assistance for insurers.

It is not clear yet what the outcome of this will be however it is thought that article 4 of the Draft Directive will either be deleted or at the very least redrafted so that it does not apply to insurers. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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