The European Court of Justice in Luxembourg has ruled that basing the price of insurance and annuity contracts on the gender of the insured is incompatible with human rights and will be invalid with effect from 21 December 2012.

At present, under Article 5(2) of Directive 2004/113, insurers can use gender based demographic and mortality data to price their products. For examples you can look at driving and annuities.

First driving, which is the bit that the press seem to have generally got their teeth into. Women tend to have a better car accident record than men, especially when considering those at the younger end of the spectrum (under 26 years of age). So, when allowed under law,  it makes sense to factor this in so as to make the riskier people pay the most. So, over their lifetime of driving men would be expected to pay more for their car insurance than women.

Now the bit that's ignored. With annuities there are different outcomes. At present men generally die at an earlier age than women. This means that when you purchase an annuity for your pension requirements a man would today receive a higher income for the same lump sum invested. To put it bluntly men don't get paid more, they just get paid faster. A very sensible arrangement when the law allows one would think.

Currently then men pay more into the pot than women do over their lifetimes but do get annuity equality at the end.

But the ECJ has confirmed a challenge by Belgian courts that these practices are incompatible with European anti-discrimination laws. With this new ruling men still end up losing out.

With car insurance under the new ruling, premiums for the average man and woman will be the same over their driving lifetimes. But when it comes to annuities the income derived will also be the same for both sexes but, as men die younger, they will receive less overall.

So in future men will put in the same amount as women but get less out at the end.

This may look a little unfair on the face of it and you may wonder whose human rights are actually affected by all this. But consider where that extra money that the men lose out on is going at the end of the day. After all someone has to pay for all those extra car accidents that young men have don't they?

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