THE BIG QUESTION

The Question - Should insurers be forbidden from underwriting insurance products on grounds of gender, as proposed by the EU?

The Answers

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Philip Brown, head of retirement product, Partnership

Philip Brown, head of retirement product, Partnership

No. Banning the use of gender as an underwriting and pricing factor can only have a negative impact on consumers in the longer term.

Although I understand the position taken in relation to the founding principles of the EU, the ’carve out’ for evidence based on statistical or actuarial evidence does have substance.

The fact is that men and women are different and have different physiologies, which does have a real effect on longevity.

It may suit a certain liberal viewpoint to ignore this but, if one considers the rest of the EU founding principles, where does this view of equality end? We, as an industry, could be faced with other challenges such as age, disability, religious or even race discrimination. Post code is a clear example that can be used as a proxy for religion or race in particular parts of the UK.

The proposed ban, in all probability, levels premiums up or benefits down rather than equalising them on a unisex basis. Beyond the cost to consumers, this potential change could be the tip of the iceberg in a series of changes that are contrary to the risk-based pricing that is a key principle of insurance.

Adrian Boulding, pension strategy director, Legal & General
Adrian Boulding, pension strategy director, Legal & General

Adrian Boulding, pension strategy director, Legal & General

Yes. I have advocated unisex annuities for years and still agree with it as a principle. It is not the most significant factor in longevity. Ethnic origin is a more significant factor when it comes to life expectancy, but it would be completely unheard of to use ethnic origin as a factor for underwriting insurance products like annuities and car insurance.

We have other data that we can look to for rating factors, such as smoking, postcode and size of pot. We pay more to people with smaller pots because they are likely to live shorter lives.

I have no idea which way the European Union will go when they give their pronouncement on the issue next year, but if it turns out to be retrospective, there will be challenges for the industry.

But if the EU does say the insurance exemption goes, there is likely to be a three year lead in period for theindustry to sort it out.

Ros Altmann, director general, Saga
Ros Altmann, director general, Saga

Ros Altmann, director general, Saga

No. Unless providers are willing to lose money on females’ annuities, they will simply put up rates for men. Men will be worse off and women will not be better off.

I do not trust providers on this because there is no transparency around how they price annuities. If they published rate tables which showed what the different loadings were for different factors, then I might have confidence they would pass on the benefits to women. But we do not have that and I think everyone would end up worse off.

Imagine if you could not discriminate on grounds of age for motor insurance. Prices would go up for everybody.

It is reasonable to charge young drivers with bad records more than older drivers with good records. If you support unisex annuities you are effectively saying you don’t want to use one of the sets of data that we have available to us, but you do want to use others. This makes no sense.