The UK Government has published its formal response to the ruling by the European Court of Justice (ECJ) that insurance benefits and premiums should be gender neutral after 21 December 2012.
Following the Test-Achats ASBL v Conseil des Ministres (Case C-236/09) ruling by the ECJ on 1 March 2011, insurers will no longer be able to use gender as a factor when pricing insurance contracts (see our previous blog here). In its initial response last year, the UK Government expressed disappointment with the judgment as it expected it to have a largely negative impact on consumers.
In the July 2012 paper prepared by the Treasury as a full response to the ruling in Test-Achats, the Government summarised the responses to its public consultation and went on to confirm its proposed legislative changes to implement the ruling. However, it declined to give more substantial guidance on its interpretation of the ruling and refused to legislate to provide greater clarity because it said only the courts could provide an authoritative interpretation of the judgment.
The Government confirmed it would repeal paragraph 22 of Schedule 3 of the Equality Act 2010, which covers exceptions relating to insurance, with effect from 21 December 2012. It rejected a proposal to allow paragraph 22 to continue to apply to life insurance and annuities (which were not directly addressed by the ECJ) as it felt this would be contrary to the ECJ judgment and therefore in contravention of EU law. The Government also declined requests to clarify the meaning of a “new contract” – a topic of much debate – as it said there was already a large body of contract law on this point. Further, it said that as there is no definition of a new contract within the Gender Directive (2004/113/EC), it was up to the courts to decide whether the definition used by member states is in keeping with the Directive and the ECJ judgment.
Regarding fears of inadvertent indirect discrimination, the Government referred to the European Commission guidelines as “helpful in confirming that the use of risk factors which correlate with gender should still be possible within the scope of the judgment, provided they are true risk factors in their own right.” It again deferred to the courts for further clarity on the precise interpretation of indirect discrimination. The Government also said its view is that collecting data on gender for assessing overall risk of a pool is not prohibited by the Gender Directive, and that the use of gender data for other purposes, such as reinsurance, is unaffected by the ruling because it does not concern treatment of the consumer.
On group insurance schemes, the Government said it intended to leave paragraph 20 of Schedule 3 of the Equality Act unchanged. This means that group insurance schemes which provide benefits to employees in pursuance of arrangements made by an employer may continue to use gender to price such insurance policies. However, insurers of other group insurance schemes may have to consider whether they are providing a service to the public or a section of the public for the purposes of section 29 of the Act.
The Government acknowledged that there is some confusion within the insurance industry concerning work based pension schemes and annuities, particularly surrounding the interaction between the Gender Directive and the Equal Treatment Directive, but again pointed to the EC guidelines as providing helpful information and said only the courts or further European law could clarify the position.
The full text of the response paper can be found here.