Court of Justice of European Union Condemns Use of Gender in Assessment of Insurance Risks
On 1 March 2011, following the opinion of its Advocate General (See, this Newsletter, Volume 2010, No. 10, p. 2), the Court of Justice of the European Union (the "ECJ") declared invalid Article 5(2) of Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment between men and women in the access to and supply of goods and services (the "Directive"). Article 5(2) of the Directive contains an exception to the general prohibition of sex discrimination laid down by the Directive. More specifically, this provision allows Member States "to permit proportionate differences in individuals' premiums and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data".
This exemption was implemented in Belgian law by Article 10(1) of the Law of 21 December 2007 amending the Law of 10 May 2007 combating discrimination between men and women with respect to gender in insurance matters (Wet tot wijziging van de Wet van 10 mei 2007 ter bestrijding van discriminatie tussen vrouwen en mannen wat betreft het geslacht in verzekeringsaangelegenheden / Loi modifiant la loi du 10 mai 2007 tendant à lutter contre la discrimination entre les femmes et les hommes, pour ce qui est de l'appartenance sexuelle en matière d'assurance) (the "Law of 27 December 2007").
Called upon to rule on the constitutionality of the Law of 27 December 2007, the Belgian Constitutional Court sought preliminary guidance from the ECJ on the validity of Article 5(2) of the Directive.
The ECJ stated first that the principle of equal treatment between men and women, enshrined in Articles 21 and 23 of the Charter of Fundamental Rights of the European Union (the "Charter"), requires that comparable situations must not be treated differently and that different situations must not be treated in the same way, unless such treatment is objectively justified. The ECJ held further that the comparability of situations must be assessed in the light of the subject-matter and purpose of the measure which draws such a distinction.
Applying these principles to the case at hand, the ECJ found that the purpose of the Directive was to ensure the application of unisex rules on premiums and benefits. As a consequence, men and women had to be regarded as being in a "comparable situation" with regard to insurance premiums and benefits, and could therefore not be made subject to differential treatment.
The ECJ acknowledged that the EU lawmaker could allow Member States to maintain the use of gender as a relevant criterion for the calculation of insurance premiums and benefits, but only for a limited period of time. In that respect, the ECJ observed that there was a risk that the derogation contained in Article 5(2) of the Directive would permit such differences in treatment to persist indefinitely. Accordingly, the ECJ concluded that Article 5(2) of the Directive had to be declared invalid insofar as it frustrated the goal of the Directive and ran contrary to Articles 21 and 23 of the Charter. However, the ECJ decided that Article 5(2) of the Directive would only become invalid on 21 December 2012, thereby giving the Member States and the insurance sector almost two years to adapt their legislation and commercial practices.
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