As discussed in our Spring 2011 e-zine, on 1 March 2011 the European Court of Justice (the "ECJ") delivered judgment in the Test-Achats case ruling that, with effect from 21 December 2012 (the "Effective Date"), Article 5(2) of Council Directive 2004/113/EC (the "Gender Directive") is invalid.
Since this judgment, there has been considerable uncertainty and confusion within the insurance industry and among national regulators and legislators as to how the judgment will apply in practice.
With the aim of facilitating compliance by Member States at a national level, the European Commission published its guidelines on the application of the Gender Directive to insurance in light of the judgment of the ECJ in Test-Achats (the "Guidelines"). The Guidelines are stated to be without prejudice to any future interpretation that the ECJ may give to Article 5 of the Gender Directive and the ECJ is not bound by the Guidelines.
The Guidelines make the following key points in relation to the practical impact of the Test-Achats judgment for the insurance industry:
there is no longer any exception to the rule that the use of gender as an actuarial factor in the calculation of premiums and benefits by insurers must not result in differences in individual's premiums and benefits; they provide guidance on the interpretation of the term "new contract" and seek to identify the types of contract to which the above rule applies; and they identify various gender-related insurance practices which are still permissible. The Gender Rule
The Guidelines state that as from the Effective Date, there are no possible exceptions to the application of the rule in Article 5(1). Article 5(1) sets out that the use of gender as an actuarial factor in the calculation of premiums and benefits by insurers must not result in differences in individual's premiums and benefits (the "Gender Rule"). According to the Commission, Member States can no longer rely on the Article 5(2) exception, which previously allowed insurers to permit proportionate differences in individuals' premiums and benefits where the use of gender as a determining factor in the assessment of risks was based on relevant and accurate actuarial and statistical data.
The Gender Rule only applies to "new contracts"
Article 5(1) provides that the Gender Rule only applies to "new contracts" concluded after 21 December 2007, a term which was left undefined in the Gender Directive. The Guidelines emphasise the...