On 1 March 2011, the Court of Justice of the European Union (CJEU) decided the so-called Test Achats case on insurance premiums.

The CJEU was responding to a question posed to it by the Belgian Constitutional Court under the so-called "preliminary reference" procedure whereby a court or tribunal in an EU Member State may refer to the CJEU novel questions of EU law which arise in cases before them.  

The question in this case essentially asked whether men and women must be charged the same premium for insurance purposes. In other words, could there be discrimination between the sexes in regard to insurance?  

The CJEU stated emphatically that there could be no discrimination but it has given the insurance sector until 21 December 2012 to adjust to the new regime.

The legal background to the case is simpler than might first appear. At present, the relevant law is contained in both the Treaty on the European Union and the so-called Gender Directive. The Treaty on European Union provides for equality between men and women. The Gender Directive (Directive 2004/113) also prohibits all discrimination based on sex in the access to, and supply of, goods and services. However, there is a derogation in the Directive to allow insurers to price discriminate between men and women. The derogation is contained in Article 5(2) of the Gender Directive and permits Member States to use sex where it is a "determining factor" in the assessment of risk and where it is "based on relevant and accurate actuarial and statistical data." This means that if it could be demonstrated that women drivers are a lower risk than male drivers then women can be charged lower premiums. Conversely, women receive lower annuities than men because they are likely to live longer and the insurer has to pay out more because they have to pay it for a longer time. The net question in the case was therefore whether the derogation in the Directive (i.e., the secondary EU law) was compatible with the Treaty and the EU Human Rights Charter. (i.e., the primary EU law).

The question of this compatibility (or otherwise) was tested in a Belgian court in a case brought by a consumers' association and some individuals. The Belgian court referred the question to the CJEU.

An Advocate General at the CJEU, Julianne Kokott, advised the CJEU in September 2010 that the derogation in Article 5(2) should be annulled because it contravened the fundamental principle of equal treatment between the sexes (i.e., the directive breached the Treaty). The CJEU is not bound to follow the opinions of an Advocate General but the court typically does so.

After considering the Advocate General's opinion and the submissions of various countries (including Ireland and the UK), the CJEU held that gender based pricing is contrary to the fundamental principle of equal treatment between the sexes - a principle enshrined in the Treaty on European Union.

The CJEU stated that it "has consistently held that the principle of equal treatment requires that comparable situations must not be treated differently, and different situations must not be treated in the same way, unless such treatment is objectively justified" and therefore there ought to be no discrimination in this context either. The CJEU was more technical and narrower in its approach than the Advocate General but came to the same result.

The CJEU provided for a transition period until 21 December 2012. This is welcome but the choice of date is somewhat arbitrary. That date would be five years from the deadline for transposition of the Directive into national law and there was meant to be a review on that date. Curiously, it means that the CJEU has accepted the notion that there could be a "transition period" for a breach of a fundamental principle of EU law (namely, gender discrimination).

By 21 December 2012, the Member States will have to repeal the national legislation which gave effect to the EU derogation and insurers will have to adjust their pricing regimes to cope with the change.

There is no appeal from a CJEU decision in this context. However, as has happened before with other gender discrimination cases, there could well be a series of cases from other Member States clarifying the matter and some of these cases will probably involve preliminary references to the CJEU. The law is clearer, but not totally clear, the position should be clarified over time with further case-law.

Please click here to view The judgment in C-236/09 Association Belge des Consommateurs Test-Achats ASBL and Others v Conseil des Ministres.