Taking the gender of an insured person into account as a risk factor in insurance contracts is incompatible with the EU’s fundamental principle of ensuring non-discrimination on grounds of sex. To this end, member states must not be permitted, even by EU law itself, to legislate anything to the contrary, European Court of Justice Advocate General Juliane Kokott recently opined.
The object of this opinion is a provision in an EU directive which derogates to a limited extent from the general prohibition of non-discrimination on grounds of gender in the access to and supply of goods and services. The overall objective of this EU directive is to extend the principle of equal treatment for men and women outside the labour market, by ensuring that both men and women are not discriminated against when they seek to access a particular good or a service. Such a prohibition applies in particular in the field of insurance.
The directive prohibits, in principle, the use of an individual’s gender as a determining factor in the calculation of premiums and benefits for the purposes of insurance and related financial services, in all new contracts concluded after December 21, 2007. Indeed, at the time of the adoption of this law, the European Commission had deemed insurance companies’ practice of placing women and men in different pools for the calculation of premiums to be discriminatory. However, this law allows member states to permit gender-specific differences in insurance premiums and benefits provided that gender is a determining risk factor which can be substantiated by relevant and accurate actuarial and statistical data which is available to the public.
Indeed, Malta decided to avail itself of such an exception and inserted the relevant derogating provision in the national transposing law, namely, Article 5 of the Access to Goods and Services and their Supply (Equal Treatment) Regulations, 2008.
This derogation seems to be now in the line of fire. A Belgian consumer organisation and two individuals filed an action before the Belgian national courts requesting the annulment of the Belgian provision which caters for such an exception in Belgian law. The national court in turn filed a preliminary reference before the European Court of Justice requesting guidance as to whether the derogation provided for in the EU directive in fact contravenes a fundamental principle entrenched in the EU’s juridical system law, namely that of ensuring equal treatment for men and women.
In coming to her conclusions, Advocate General Kokott emphasised the importance of the principle of equal treatment of men and women under EU law. The Advocate General conceded that differences in treatment could, at most, be justified by clear and evident biological differences between the sexes. She opined that the derogation in question does not relate to any clear biological difference between insured persons.
On the contrary, it concerns cases in which different insurance risks can at most be associated only statistically with gender. The Advocate General highlighted the fact that many other factors, besides gender, play an important role in the evaluation of insurance risks.
The life expectancy of insured persons is above all strongly influenced by the economic and social conditions of each individual, such as, for example, the kind and extent of the professional activity carried out, the family and social environment, eating habits and other factors.
It is legally inappropriate to link insurance risks to a person’s sex, the Advocate General maintained.
The Advocate General therefore concluded that the use of actuarial and statistical factors based on sex in connection with insurance premiums and benefits is incompatible with the over-riding principle of equal treatment for men and women under European Union law.
She therefore proposed that the court should declare the relevant derogating provision in the EU directive to be invalid. For reasons of legal certainty, the Advocate General, however, took the view that such a declaration of invalidity should only have effect for the future and that a transitional period of three years following the delivery of the judgment by the Court should be given.
The implications of this opinion are indeed far-reaching and eliminate any possibility for insurance companies to take into consideration factors based on sex in assessing the risk element for insurance contracts. Nonetheless, one has to bear in mind that the Advocate General’s opinion is not binding on the European Court of Justice and therefore one has to await the ruling of the Court in order to have a definitive conclusion on the matter.
mariosa@vellacardona.com
Dr Vella Cardona is a practicing lawyer and a freelance consultant in EU, intellectual property, consumer protection and competition law. She is also a visiting lecturer at the University of Malta.