On 22 December 2011, the European Commission (“EC”) published a press release and guidelines (the “Guidelines”) on the application of the Gender Directive (2004/113/EC) (the “Directive”) in light of the decision of the European Court of Justice (“ECJ”) in Association Belge des Consommateurs Test-Achats and others (Case C-236/09) [2009] ECJ (“Test-Achats”).

The EC stated that, following consultations with national governments, insurers and consumers, the Guidelines respond to the need for practical guidance on the implications of Test-Achats. Viviane Reding, the EU’s Justice Commissioner, commented that “it is now up to the insurance industry to ensure that there is a smooth transition to fully equal treatment of men and women in insurance. The [EC] will remain vigilant in how the industry implements the [ECJ’s] ruling”.

The Guidelines centre around the following:  

  1. Clarification that Test-Achats only applies to ‘new contracts’. The Guidelines also include specific examples of what is considered a ‘new contract’.
    • The EC comments that the objective of this rule is to avoid a sudden readjustment of the market.
    • Contracts concluded for the first time as from 21 December 2012, and agreements between parties concluded as from 21 December 2012 to extend contracts concluded before that date which would otherwise have expired, will be ‘new contracts’.
    • However, the automatic extension of a pre-existing contract, adjustments made to individual elements of an existing contract where the consent of the policyholder is not required, taking out top-up or follow-on policies whose terms were pre-agreed in contracts concluded before 21 December 2012 where these policies are activated by a unilateral decision of the policyholder, and the mere transfer of an insurance portfolio from one insurer to another, will not be ‘new contracts’.
  2. Examples of gender-related insurance practices which are compatible with the principle of unisex premiums and benefits, and therefore will not need to change because of Test-Achats.
    • The EC comments that the Directive does not prohibit the use of gender as a risk-rating factor in general – it can be used in the calculation of premiums and benefits at an aggregated level, as long as it does not lead to differentiation at individual level.
    • Therefore, insurers will remain able to collect and use gender status for their internal risk assessment, gender can still be used in the pricing of reinsurance, it remains possible for insurers to use marketing and advertising to influence their portfolio mix, and in light of certain physiological differences between men and women, there are some medical related risk factors on the basis of which differentiation is possible (for more on this, see Annex 3 of the Guidelines).

The EC was also keen to clarify that Test-Achats does not mean that women will always pay the same car insurance premiums as men.