You may have heard about the recent European Court of Justice (ECJ) ruling on gender discrimination which means that insurers can no longer charge different rates for men and women (see ‘Test-Achats ECJ decision bites’). 

Changes are set to come into place in December 2012 – when we could see higher prices for protection insurance. It might make sense to buy cover before these rises come into force.

The media has focused on the perceived unfairness of the ECJ ruling. To date, insurers have charged men and women different rates according to the risk. It is now believed that where one sex gets a better deal, this will change to create parity. But do not expect any price reductions – insurers are more likely to raise the price of the lower premium. 

Most media coverage to date has been of women drivers – they tend to have fewer serious accidents, and so generally get cheaper premiums. Now their rates are set to rise, and protection insurance is also set to become more costly. At present, women pay less for life cover because they live longer, but the Association of British Insurers has said that life insurance rates for women could go up by around 20%. 

What about insurance like critical illness? Presently, women pay more for this as they make more claims. It is now expected that these policies are set to become more expensive for men.

There is another reason why protection insurance is set to become more expensive. The last Budget revealed plans to remove the protection class of business from the ‘I minus E’ tax regime, which stands for ‘Investment return minus Expenses of management’.

Under the current structure, companies with large savings books can use their savings business to offset the expense of protection business, meaning they could offer lower premiums as a result. There is also the impact of the impending Solvency II Directive, which requires insurers to hold more capital to maintain a strong balance sheet. Protection insurance matters – and so does taking the right advice on what is right for your needs. Please contact us to go over your options.