EU Bans Insurer Price Discrimination Based on Gender

Josh Wright —  1 March 2011

From the WSJ:

The European Union’s highest court declared illegal the widespread practice of charging men and women different rates for insurance, roiling the industry and setting in motion an overhaul of how life, auto and health policies are written across Europe.Two Belgian men had challenged the higher life-insurance premiums charged to members of their sex, arguing that it was discriminatory. In a ruling Tuesday, the Luxembourg-based European Court of Justice agreed.   The judgment cannot be appealed.  It will have vast implications: Insurers routinely charge women, who live longer, lower premiums for life insurance and smaller sums for annuities; male drivers, who statistically cause more accidents, pay higher premiums for auto policies.


Insurers, she wrote, were using sex as a sort of convenient shorthand for underlying causes of longevity or risk—such as propensity to engage in dangerous behavior, eating and drinking habits, and so on. That sex is far easier to identify than many—or perhaps all—of these characteristics is no excuse, she argued, for violating the nondiscrimination principles.

Thus, more indirect and less efficient forms of price discrimination are OK.  It is unclear whether the Court considered whether prohibiting price discrimination would impose costs upon the “discriminated” against group, i.e. in this case, women.

4 responses to EU Bans Insurer Price Discrimination Based on Gender


    I didn’t claim they would — just that the ban would impose costs upon them. More efficient pricing, i.e. price discrimination, can increase output and draw in marginal consumers to the insurance market that would not but for the discriminatory pricing. Some of these will be women. In terms of welfare analysis, those benefits from price discrimination would have to be weighed against any costs.


      The newspaper story quoted in the post said, “Insurers routinely charge women, who live longer, lower premiums for life insurance and smaller sums for annuities.” That statement was the one that I didn’t understand.


    Why would women be charged lower sums for annuities, rather than higher sums?

    Walter Sobchak 1 March 2011 at 10:04 am

    It would be even more interesting if they were to ban price discrimination based on sex.