Paul MacDonnell – Head of EU, Regulatory Affairs 6th June 2012 The ECJ Decision on Gender Are there implications for age and disability? Paul MacDonnell – Head of EU, Regulatory Affairs 6th June 2012

The ECJ Decision on Gender – implications for age, disability The facts The decision and its effects 1st March, 2011 ECJ ruled ‘opt-out’ (5.2) of Gender Directive as invalid. Industry required to apply unisex rating from 21st December, 2012 Premiums of young women drivers are likely to rise Cost of purchasing non-occupational retirement annuity for men is likely to fall Ruling does not change underlying risk metrics. Younger women are still better drivers than younger men Women still live longer – though this is changing as women take up more unhealthy lifestyles

The ECJ Decision on Gender – implications for age, disability Ruling does not change underlying risk metrics Insurers will still be able to collect data based upon gender Reinsurers will still be able to price reinsurance based upon gender mix of their insurer customers Some possible complications Ruling is in force from 21st Dec whether legislatures implement it or not Individuals could, in theory, take legal action against an insurer after this date if the government fails to implement legislation What is a ‘contract’? On 22nd December 2011 EC published guidelines arguing that one pan-EU definition should apply

The ECJ Decision on Gender – implications for age, disability What is a contract... ‘Accordingly, the unisex rule pursuant to Article 5(1) shall apply whenever a) a contractual agreement requiring the expression of consent by all parties is made, including an amendment to an existing contract and b) the latest expression of consent by a party that is necessary for the conclusion of that agreement occurs as from 21st December 2012‘ (EC Guidelines 11) ...automatic adjustments not requiring consent do not seem to be affected. (EC Guidelines 13.) ECJ decision to be given effect (so we understand) in Bill to replace the Equality Authority and the Human Rights Commission with a new merged body

The ECJ Decision on Gender – implications for age, disability Directive on Religion or Belief, Disability, Age or Sexual Orientation (Latest version, March 2012) Insurers wish this to be ‘ECJ Proof’ – i.e. to be clearly drafted and to explicitly exclude insurance where medical knowledge / information and or actuarial data are known. Danish Presidency Text aims for this... ...however it proposed restricting insurers to varying price based on actuarial evidence only rather than actuarial evidence, statistical information and medical information.

The ECJ Decision on Gender – implications for age, disability What does it all mean for Gender? Insurers now no longer ‘know’ (for the purposes of pricing) whether a young motorist is male or female. Hence prices will tend to reduce for young males and increase for young females More young males will drive and cause accidents Drivinig will be more expensive for young females who, on average, tend to earn less anyway ..so the ECJ decision operates as a tax on young women and (to some extent) on older men purchasing annuities What does it all mean for Age / Disability? Unknown at this point. It seems that this Directive will not fall into the same trap as Gender but if, insurers were restricted to ‘actuarial information only’ then similar ‘community-rating’ type issues will arise as we expect to see with Gender .

The ECJ Decision on Gender – implications for age, disability Are there alternative ways to insure not based upon ‘categories’? In the case of Life insurance and age – in the short to medium term – definitely not. Non Life – maybe but it would be more expensive for most policyholders and much less efficient. Maybe other criteria can be found Use of Facebook other social networks, psychometric testing, occupation, martial status, genetic information ...problem is that any of these could run up against other anti-discrimination initiatives or against data protection rules.

The ECJ Decision on Gender – implications for age, disability DISCUSSION