On 31 October 2012, the Department of Justice and Equality issued a press release, Scheme of a proposed Bill (the Equal Status (Amendment) Bill) and consumer information note in relation to proposed gender equality measures for insurance.
What is the rationale behind the proposals?
The Scheme of the proposed Bill sets out certain intended changes to the Equal Status Act 2000.
The purpose of this is to reflect the decision of the Court of Justice of the European Union in the Test-Achats case (Case C- 236/09 Association belge des Consommateurs Test-Achats ASBL, 1 March 2011) that taking the gender of an insured individual into account as a risk factor in insurance contracts constitutes unlawful discrimination. On that basis, the Court of Justice of the European Union declared invalid, from 21 December 2012, the facility (set out in Directive 2004/113/EC) allowing Member States to permit insurers to apply differing premiums and benefits to policyholders based on gender risk factors.
Ireland had implemented this facility in the Equal Status Act 2000 by allowing insurers (and other persons providing goods and services) to discriminate on the basis of gender in limited circumstances. Insurers were permitted to charge different premiums and provide different benefits based on gender, if the basis for the differentiation was reasonable and based on reliable actuarial or statistical data (or other relevant underwriting or commercial factors).
What are the key changes proposed?
The key change is that, from 21 December 2012, it will no longer be permitted to offer differing premiums and/or benefits to policyholders based on gender. However, according to guidance issued by the European Commission, this will only be the case for ‘new’ contracts (a concept which has been the subject of much European stakeholder commentary since the Test-Achats decision). “New contracts” is not defined in the Scheme of the proposed Bill. However, on its ordinary meaning, it would include fresh insurance contracts, renewals and certain mid-term adjustments.
The two key types of insurance which will be affected by the changes are life assurance and motor insurance, where gender has traditionally been a heavily influential factor in the risk assessment process.
The Scheme of the proposed Bill sets out changes (mainly of a technical nature) to the Equal Status Act 2000. These include:
the exemption of life and motor insurance contracts concluded prior to 21 December 2012 from the rule against gender discrimination;
interestingly, a confirmation that mid term adjustments in relation to motor insurance will not constitute ‘new’ contracts for the purpose of the new rules (life assurance is not mentioned in this regard);
a new sub-section which confirms that it will not be prohibited for insurers to collect, store and use gender-centric information if it is genuinely required for (a) reserving and internal pricing, (b) reinsurance pricing and (c) life and health underwriting; and
the ceasing of the Central Bank’s obligation (for 2012 and subsequent years) to compile, publish and maintain data relevant to the use of gender as a determining actuarial factor in risk assessment for life, motor or health insurance.
The Bill will be subject to ongoing consultation with appropriate Governmental departments and the Attorney General, prior to being published.
In light of the imminent 21 December 2012 deadline, it may be expected that the proposed Bill will be progressed speedily (although the information published by the Department of Justice and Equality does not indicate a specific timeframe). The Scheme for the proposed Bill provides that it will come into operation upon enactment.