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EU Gender Ruling: Your need-to-know guide

Flag of the European UnionThe EU Gender ruling will lead to a rise in the cost of insurance for millions of Brits. But 53 per cent of people don't know it's happening. We explain all in this need-to-know guide. 

What’s happened?

Last year, the European Court of Justice (ECJ) ruled that the long-established practice of using gender when calculating insurance prices amounts to illegal discrimination.

The Court’s decision means that members of the European Union, including the UK, have to ban the use of gender when calculating insurance prices.

When?

The EU gender ban will come into force on 21 December 2012.

This ban affects motor insurance - car, van insurance and motorbike insurance - as well as life insurance and annuities.

Motor insurance

Currently, motor insurance for women costs less than their male counterparts because they are statistically safer behind the wheel – that is, women drivers have fewer accidents.

But by 21 December, women's motor insurance prices will be brought into line with men's.

This means that women’s premiums are likely to be raised significantly.

Government estimates suggest women’s car insurance premiums could rise by up to 24 per cent for females aged 17 to 25, a rise of around £299.

This £299 price rise is based on the latest Confused.com/Towers Watson car insurance price index which looks at prices returned for annual comprehensive policies between July and September 2012. 

But this doesn't mean that older men and women will be unaffected by the EU gender ruling – consider if you have young drivers on your policy as named or additional drivers. 

Life insurance

Currently, women generally pay less for life insurance policies than men.

This is because women tend to live longer, so are less likely to make a claim on a life policy.

Women are less likely to claim simply because most life policies run for a fixed number of years, not because women are less likely than men to die.

But from 21 December, this will change due to the gender ban.

According to exclusive research by Confused.com, the cost of life insurance for women could rise by as much as 21 per cent.
 
This is based on the difference between a male and female level term policy with a sum insured £150,000, over 10 years and non-smoking at 34 years old.

Annuities

An annuity is used to convert a pension pot into an annual income. It pays out a guaranteed income during your retirement, so you know how much you’ll receive each month until you die.

Until now, women have been getting a worse deal than men on their annuity rates to reflect the fact they will live longer – and therefore the income has to stretch further.

Men enjoy a higher pension income because they have a shorter average life expectancy – and collect fewer years’ pension payments.

Annuity rates could fall by 3 to 4 per cent for men, while women’s rates could increase by 1 to 2 per cent, according to retirement specialists MGM Advantage.

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Naphtalia Loderick

Naphtalia Loderick

Naphtalia Loderick reports on all things personal finance at Confused.com. She started out on a weekly newspaper, via a national news agency and a stint in the fun but ‘not as glamorous as it appears on screen’ world of TV at the BBC researching consumer films for The One Show.

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