Advisers have expressed their shock at revelations a European Court ruling could require insurance contracts to be altered retrospectively and see some providers close to new business.
They are worried the decision relating to the use of gender for underwriting could be ‘potentially massive' and lead the market into chaotic ‘wild west territory'.
COVER revealed earlier this week the European Court of Justice ruling, expected on 1 March, could force insurers to stop using gender for risk differentiation immediately and make them amend their contracts retrospectively.
The initial opinion from Advocate General Kokott declared insurers should not be able to use gender in risk pricing. It suggested a three year transition period for providers to install gender neutral contracts and premium calculations along with revising those policies presently in force.
However, the judges could go further than this, ruling all changes need to be implemented immediately; something providers with older legacy systems may not be able to do.
Peter Chadborn, director of Plan Money, was particularly concerned about any impact on existing policies.
He says: "We are surmising a lot here about the outcomes but it's potentially massive. All kinds of angles could be affected. Advisers' initial concerns will be if there is any retro-active legislation that will affect their existing book.
"That could have a massive effect on their cash flow and is completely out of our control. Secondly they would ask: ‘how is that going to affect new business?"
"When we are positioning new business it could make certain types just completely unattractive - it just won't work," he added.
Roy McLoughlin, senior partner at MasterAdviser, also expressed his fears about the decision but identified a glimmer of hope.
"The fear is what do we end up with?" he said.
"We could take this to the n-th degree and that would be the end of insurance full stop. If they do anything retrospective we are into wild west territory because there would be absolute chaos.
"This is going to have to result in insurance companies systems being re-designed, which is presumably going to put the price up.
"Although, women in particular find it hard to understand with certain products why premiums are higher than for men. If that is a prohibitive factor to them buying then I guess there is a positive side to this equalisation," he added.
