On 1 March 2011 the European Court of Justice ruled that the previous exemption in the context of Equality Legislation which allowed insurers to use gender as a factor in calculating premiums, was invalid and that this exemption would not be extended beyond 21 December 2012.

The purpose of this paper is to document and explore the effects of this change on the pricing, product design and distribution of Life Insurance in the European Union. 

Insurers are currently preparing to change their product pricing to gender-neutral terms.  These preparations include:

-       analysis of current and projection of future business mixes as an input to pricing

-       development of strategies to phase in gender-neutral terms to minimise adverse selection

-       development of tactics to secure a favourable business mix in the gender-neutral environment

-       plans and communications regarding the management of cases submitted in the lead-up to the change over and which may not complete underwriting by 21 December

Our paper will report on the outcomes of these activities.  We will include our own analysis of business mixes and identify factors that explain gender mix.  As a case study we will monitor and report on individual UK insurers’ pricing strategies in the lead-up to 21 December and in the following months.  Finally we will provide an estimate the cost of this regulatory change to the insurance industry and policyholders.

We believe that the results of our research will help European insurers to price and design products in an ongoing gender-neutral environment.  The lessons we learn from this change will have useful application in other contexts where regulatory changes impact the pricing of insurance.