The Association of British Insurers (“ABI”) published an update on 12 August 2011 on developments following the judgement of the Court of Justice of the European Union (“ECJ”) in Association Belge des Consommateurs Test-Achats and others (Case C-236/09) [2009] ECJ (“Test-Achats”) and related issues. The ABI’s update can be viewed here.

Test -Achats

In summary, this case found that Article 5(2) Insurance exemption of the Gender Directive (2004/113/EC) worked against the objective of the Gender Directive. Article 5(2) would be made invalid from 21 December 2012, and all new contracts of insurance concluded after 21 December 2012 must be gender neutral in respect of both pricing and the benefits paid out. For further comment on Test-Achats please see our March 2011 bulletin, which can be accessed here.

In its update, the ABI comment that the European Commission does not propose to amend the Gender Directive to reflect Test-Achats at this stage. This is due to the fact that the ruling is directly applicable and does not require a technical amendment to the Directive.

The European Commission invited stakeholders to submit answers to a written questionnaire on the main issues arising out of Test-Achats, and the responses it received are being fed into high-level guidelines intended to address uncertainties arising out of the judgement. The European Commission expects to publish these guidelines in the fourth quarter of 2011. The guidelines will address, amongst others, the following areas:

  • the application of Test-Achats to new contracts of insurance issued after 21 December 2012;
  • the definition of a new and renewed contract, in order to obtain a uniform approach at Member State level;
  • examples of gender-related practices that will be allowed, such as the use of gender in reinsurance and capital reserve calculations; and
  • examples of medical underwriting where it will be permissible to differentiate by gender due to biological differences, e.g. prostate cancer.

The ABI notes that some insurers have argued forcefully that the European Commission should be pushed to propose a substantive amendment to the Gender Directive in order to reverse the effect of Test-Achats. The ABI has not approved this as it believes it is unachievable and legally risky.

Article 2(7) of the draft Equa l Treat ment Directi ve on Age and Disability

The ABI’s update also notes the fact that whilst several possible wordings of Article 2(7) of the draft Equal Treatment Directive on Age and Disability have been proposed by different EU Presidencies, the European Insurance and Reinsurance Federation (“CEA”) is concerned that the wording of Article 2(7) may also be vulnerable to legal challenge on the same basis as Test-Achats.

The Directive is currently blocked in the European Council and it is not likely that significant progress in relation to it will be made during the Polish Presidency.

The CEA recently engaged a law firm to analyse the structure of Article 2(7), and the law firm were of the belief that the reasoning in Test-Achats could not be used to determine whether Article 2(7) could be invalidated by the Court. Instead, previous case law must be considered.

The ABI is providing feedback to the CEA on this point and will update members on the outcomes of both its analysis and the ensuing debate in due course. The ABI is also working closely with the Treasury, which has the ability to provide alternative wording to Article 2(7) in the European Council.