By Martin Banks - 28th February 2011
That these judges would magically rule that young women should pay more in the name of equality is simply perverse
Stephen Booth
An ECJ ruling this week could cost young women drivers an extra €5000 and require the UK insurance industry to raise over €1bn more in capital, it has been warned.
On Tuesday the ECJ is expected to scrap the European insurance industry's opt-out from the EU's gender directive.
It is feared this will mean that insurers can no longer offer different products and prices to men and women based on their gender.
The UK-based think tank, Open Europe, has calculated that if ECJ judges rule to scrap the opt-out, British insurance providers will need to raise an extra €1096m in capital to cover themselves against new "uncertainties" created in the market.
The industry has warned that these costs will be passed on to consumers.
Open Europe says that rather than equalising men and women's existing insurance costs, the ruling would in fact increase total costs for consumers taken as a whole.
The ruling will affect several different insurance and pension products, including motor insurance, private medical insurance, life insurance and annuities.
Taking motor insurance as an example, Open Europe estimates that, on average, a 17-year-old female driver will have to pay an extra €5000 in insurance premiums by the time she is 26 as a consequence of the ruling.
On the other hand, male drivers would save an estimated €3800 over the same period of time. In a worst case scenario, women drivers' cumulative insurance costs between the ages of 17 and 26 could increase by as much as €10,000.
The expected ruling is based on an opinion from an ECJ advocate general that using gender to differentiate between male and female insurance policies is in violation of the Charter of Fundamental Rights.
The outcome of the ruling is unknown but ECJ judges rule in line with Advocate Generals' opinions in 80 per cent of cases.
Open Europe research director Stephen Booth said, "Giving EU judges free rein to rewrite laws that the UK Government has signed up to in good faith can cause hugely damaging and unforeseen consequences.
"That these judges would magically rule that young women should pay more in the name of equality is simply perverse. Instead of making prices fairer between men and women, this ruling would increase costs for consumers taken as a whole."
"This is a perfect illustration of how giving ever greater powers to unaccountable EU judges does not only come with a democratic cost, but can also have massive economic costs for individual consumers and the wider UK economy."
He added, "Clearly, we need some checks and balances in place to make sure this doesn’t happen again and again in other areas of EU law."
A spokesman for the Association of British Insurers said, "A ban would be a significant challenge for the industry but there is no right of appeal."
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