Is car insurance discrimination ruling completely bonkers?

Association belge des Consommateurs Test-Achats ASBL, Yann van Vugt, Charles Basselier v Conseil des ministres, Case C‑236/09 – Read judgment / press release

The Court of Justice of the European Union (CJEU) has ruled that from December 2012, insurers will be prevented from charging different premiums on the basis of an insured person’s gender. A partner at a leading commercial law firm called September’s preemptive preliminary opinion “completely bonkers”. Can the same be said about the latest decision?

Coverage of the decision has already been largely negative. As well as involving Europe’s increasingly unpopular and possibly unelected judges, the ruling affects an interest group – insurance companies – with deep pockets and who are capable of sophisticated lobbying. And nobody wants to see their insurance premiums go up, if that is indeed to be the outcome of this ruling, something which is by no means clear. So expect to see plenty of critical articles. The Telegraph website is already sporting an unchallenged article/press release from Esure, including a video interview which begins with an advert for ESure’s “Sheila’s Wheels”.

But what did the court actually say? At 36 paragraphs, the judgment is refreshingly short, and the CJEU has also produced a handy press release. So there is little preventing the public from reading it for themselves.

In summary, the case goes back to Council Directive 2004/113, which implemented the principle of equal treatment between men and women in the access to and supply of goods and services. A directive is a piece of European Union law which tells member states that they have to achieve a certain goal, but leaves the detail of how to go about it to the states, within reason. States have to comply with directives because they agreed to do so when they signed up to the EU Treaty.

The 2004 Directive made clear that it applied to direct as well as indirect discrimination on the basis of gender. This is a legal distinction which is well-known to English lawyers. Direct discrimination means treating someone less favourably than others on the basis of a protected characteristic, such as gender or race. For example, telling an employee that “all women are stupid” would be direct discrimination. Indirect discrimination is when a policy has a disproportionate effect on a protected group, and cannot be justified. For example, requiring that a person had 25 years of experience or more to qualify for a job may be indirect age discrimination. But it may be legitimately justified as the job is complex and needs someone with experience.

Back to insurance. The Directive stated in its preamble, amongst other things:

(18) The use of actuarial factors related to sex is widespread in the provision of insurance and other related financial services. In order to ensure equal treatment between men and women, the use of sex as an actuarial factor should not result in differences in individuals’ premiums and benefits.

But there was a get-out clause:

To avoid a sudden readjustment of the market, the implementation of this rule should apply only to new contracts concluded after the date of transposition of this Directive.

To that end, states were given the option to permit proportionate differences in insurance premiums using sex as a determining factor, as long as they published their data and reviewed the decision on 21 December 2012.

The question for CJEU, asked by a court in Belgium in a case brought by a consumer group, was whether the rules were compatible with Article 6(2) of the European Union Treaty, which states that the Union shall “respect fundamental rights”, as guaranteed by the European Convention on Human Rights.

The court held that it was not. The problem was that the get-out clause had no time limit. So states could continue to exempt car insurance from the wider principles of the Directive effectively forever:

given that Directive 2004/113 is silent as to the length of time during which those differences may continue to be applied, Member States which have made use of the option are permitted to allow insurers to apply the unequal treatment without any temporal limitation.

The court went on to discuss, briefly, whether car insurance premiums for men and women were in fact comparable with each other. This is important, as discrimination law requires that people in protected groups (for example, men and women) are treated equally but only in situations where the treatment of those groups can truly be said to be comparable. So, for example, it could never (well, probably never) be discriminatory for men to restricted in accessing maternity services as compared to women...........

Read more : http://ukhumanrightsblog.com/2011/03/01/is-car-insurance-discrimination-ruling-completely-bonkers/