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Brussels, 1 March 2011
Sex Discrimination in Insurance Contracts: Statement by European Commission Vice-President Viviane Reding, the EU’s Justice Commissioner, on the European Court of Justice's ruling in the Test-Achats case
The Court of Justice of the European Union today delivered its ruling in the Test-Achats case (C-236/09) concerning sex discrimination in insurance premiums. Commenting on the judgement, EU Justice Commissioner Viviane Reding (who is in charge of gender equality at the European Commission) said:
"Today is an important moment for gender equality in the European Union.
30 years ago, the Supreme Court of the United States ruled that the Civil Rights Act of 1964 prohibits different treatment of insured persons on the basis of their sex in connection with pension funds.
Today, the EU’s Court of Justice ruled that different insurance premiums for women and men constitute sex discrimination and are not compatible with the EU's Charter of Fundamental Rights. Member States are not allowed to derogate from this important principle in their national legislation. The relevant "opt out" clause in the Council's 2004 Directive on gender equality is thus illegal.
This is an important step towards clarifying the fundamental right of gender equality under EU law. Today's ruling also underlines the power and importance of our Charter of Fundamental Rights. It has the same legal value as our EU Treaties. No EU legislation can be adopted that conflicts with the rights and principles guaranteed by the Charter.
The European Commission issued a 'fundamental rights checklist' last October to make sure that all laws proposed comply with the EU Charter (see IP/10/1348). This checklist ensures that our rules are beyond any reproach. We have also called on the European Parliament and the Council to take a similar fundamental-rights-friendly approach when they add amendments in the EU law-making process. Today's ruling confirms how essential this is. It’s important to note that the derogation for insurers was not part of the Commission's initial proposal for the 2004 Directive; it was only added later by the Council.
So what happens next? The European Commission will now carefully examine the implications of the Court's decision for the EU's law on equal access to goods and services for women and men, as well as for the insurance sector and consumers.
The insurance industry will certainly be affected by the ruling. For products such as life assurance and annuities, all 27 EU countries currently allow insurers to use sex as a risk-rating factor.
However, I also would like to underline that parts of the insurance industry have already started to move in the direction of gender equality. Insurers have already shown flexibility as Belgium, Bulgaria, Cyprus, Estonia, Latvia, Lithuania, the Netherlands and Slovenia apply unisex premiums for car insurance.
In the light of today's judgement, I call on insurers across the EU to follow this good example regarding all insurance contracts.
I will convene a meeting with business leaders from the insurance industry in the coming months to discuss the judgement’s implications.
Following today's judgement, it is now clear that an insurance company must not distinguish between women and men; all customers must be treated equally. This is a matter of respect for fundamental rights. It is now also becoming a matter of good business practices."
The Court of Justice of the European Union ruled today on a preliminary reference by the Belgian Constitutional Court (Case C-236/09). The Belgian Constitutional Court had, in essence, asked the following question: Is it compatible with the fundamental rights of the EU to take the sex of the insured person into account as a risk factor on the formulation of private insurance contracts?
Council Directive 2004/113/EC of 13 December 2004 implementing the principle of equal treatment between men and women in the access to and supply of goods and services (adopted unanimously by the EU Council of Ministers) prohibits direct and indirect sex discrimination outside of the labour market.
Article 5(1) of the Directive says that "Member States shall ensure that in all new contracts concluded after 21 December 2007 at the latest, the use of sex as a factor in the calculation of premiums and benefits for the purpose of insurance and related financial services shall not result in differences in individuals' premiums and benefits."
Article 5(2) of the Directive – which had not been present in the Commission's initial proposal for the Directive, but was later included by the Council during the legislative process – gives Member States a right to derogate ("opt out") from the principle of equal treatment with regard to insurance contracts: "Member States may decide before 21 December 2007 to permit proportionate differences in individuals' premium and benefits where the use of sex is a determining factor in the assessment of risk based on relevant and accurate actuarial and statistical data. The Member States concerned shall inform the Commission and ensure that accurate data relevant to the use of sex as a determining factor are compiled, published and regularly updated."
All Member States have made use of this derogation for some or all insurance contracts. Belgian included a derogation for life insurances in its national legislation. A dispute about the legality of Belgium’s derogation led to today’s Court ruling.
Watch or download Commissioner Reding's video message on the outcome of the ruling:
Excerpts from the ”Study on the use of age, disability, sex, religion or belief, racial or ethnic origin and sexual orientation in financial services, in particular in the insurance and banking sectors," commissioned by the European Commission and concluded in July 2010, available at:
Complaints about alleged discrimination in the insurance sector
Use of sex as factor in risk assessment of motor insurance
Use of sex in risk assessment of travel insurance
Use of sex in risk assessment of term life insurance