Gender Pricing - The race to 2012

What has been the big insurance news story of 2011? One could argue it was the European Court of Justice's (ECJ) ruling on gender discrimination from 1 March, stating that all insurance policies from 21 December 2012 should be sold at the same price to men and women.

Are the majority of IFAs really aware of this? For those that are, have they really thought through the opportunities that present themself and any potential best advice issues?

At the time of the ruling, the buzz around the industry was deafening, with most insurers dropping all their planned development work for February, ensuring their underwriting and pricing systems were ready for an overnight switch to gender-neutral rates on the day of the ruling itself.

This in turn had a knock-on impact to the distributors who were being warned of the consequences of not getting their client's policies on risk before the end of February.

There was even talk of one insurer stopping quoting for the last few days before the judgement.

So what happened next? The ECJ ruled that the industry could continue the status quo for 22 months. Everyone breathed a sigh of relief and then returned to what they had been doing before.

This assessment is not strictly true, but the industry does seem to have gone mysteriously quiet about this vitally important change - for good reasons set out below.

Whether the industry believes the outcome of the ruling is a good thing or not, it needs to make sure it is as ready as possible for gender neutrality. This begs two important questions:

• What should IFAs be thinking about and doing now to maximise the opportunity that the ECJ ruling gives?

• How might the market change when the gender neutral rates go live in December 2012?

BEHIND THE SILENCE

There are a couple of very good reasons for the perceived lack of activity around gender equality.

First, there is still a huge amount of uncertainty around what the judgement means for our industry and what can or can't be done.

It now seems certain that the ruling cannot be applied retrospectively. This means insurers do not have to be concerned that prices being charged today, even on guaranteed ­contracts, might have had to change in 2012.

This gives comfort to firms and their shareholders, particularly at this uncertain time when several large companies have left the market.

Underwriting is a major unknown and the jury is out to what extent physical differences can be taken into account when assessing an applicant's health.

Issues also remain around product options such as renewals, for example - can future renewals on existing policies still be done on gender-differentiated rates, or do they need to fall into line with the new regime?