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No More Discriminatory Insurance Plans

November 7, 2003

The European Union wants to ensure equal treatment of men and women for all goods and services, including insurance. But industry experts are up in arms, saying higher premiums are based on risk, not gender.

Because they live longer, women pay higher insurance premiums.Image: BilderBox

Women often face higher premiums for pension insurance. Men pay more for their life insurance policies. This is justified by the industry on the grounds that women live longer. But this could all change soon, if the European Commission directive to outlaw these common practices is successful.

According to Social Affairs Commissioner Anna Diamantopoulou, insurance payments should be based on factors such as health risks and life expectancy -- not on gender. The Commission has now presented a proposal for a Council Directive on the equal treatment of men and women in the access to goods and services.

The proposed directive would explicitly tackle the issues of premiums and benefits in the insurance sector. So, for example, the use of sex as a factor in the calculation of premiums and benefits for insurance and related financial services would be prohibited. "This is a ground breaking proposal, calling for gender solidarity in European society," Diamantopoulou said in a statement.

Not sex, but risk

According to Diamantopoulou (photo), there are a number of factors that are not linked to sex that are equally important in establishing life expectancy, such as socio-economic or marital status, the region a person lives in or levels of smoking.

Anna Diamantopoulou Europäische Union Kommissarin für Beschäftigung und Soziales
Anna DiamantopoulouImage: AP

When these factors are removed from the equation, differences in life expectancy on purely gender grounds are much less than stated. Equally, in some member states, a distinction between the sexes is made in motor insurance, with men paying higher premiums. Here again a number of factors other than sex play a role. "It is therefore the view of the Commission that calculating risk based on the grounds of sex is discrimination," the body said.

This is not true, says the German insurance federation Gesamtverband der Deutschen Versicherungswirtschaft (GDV). "It is not discrimination, but rather a factually-based differentiation when different gender-specific insurance products have different prices," a GDV spokesman told DW-WORLD.

The concept behind insurers' calculations is simple: lower risks pay lower premiums. The spokesman said the Commission's assumption that a woman smoker poses the same risk as a non-smoking male is incorrect. "A woman would have to smoke 60 cigarettes a day to shorten her life to live as long as an average man who doesn't smoke," he said. "The sex still plays a role in life expectancy."

Diamantopoulou is not phased by the criticism. "As with past breakthroughs in the field of gender equality, it is being greeted with pessimism from some parts of industry," she said.

No cheap haircuts for women

Although the proposal aims to prohibit discrimination in all available goods and services, it does have some form of flexibility. The Commission has allowed for "justified exceptions." These involve a good or service intended exclusively or primarily for members of one sex, such as single-sex sessions in a swimming pool, or single-sex private member's clubs. In addition, it allows for differences when the skills required for its delivery were different for each sex, for example in hairdressing.

The Commission has suggested a transitional period of six years for the insurance sector to equalize its premiums.

The proposal will now be forwarded to the EU's Council of Ministers for adoption, after consultation of the European Parliament. "GDV hopes that the Council of Ministers will center their considerations more on consumer interests than the European Commission did," the insurance federation said.

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