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European Court Abolishes Sexual Discrimination In Insurance Pricing

2349 words - 10 pages

Business Ethics and Social Responsibility

European Court Abolishes Sexual Discrimination In Insurance Pricing

Index

Introduction ………………………………………………………………………………………………...... 3

Sexual Discrimination and Insurance ………………………………………………………………… 4

Normative Ethics and the Discrimination in Insurance ……………………………………... 5

Utilitarianism ……………………………………………………………………………………………………. 5

Kant Deonthological Ethic Theory ……………………………………………………………………. 7

Critical Opinion ……………………………………………………………………………………………….. 8

Bibliography ……………………………………………………………………………………………………. 9

Introduction

The aim of this report is to discuss a controversial and very recent issue regarding business ...view middle of the document...

Gender is not used as a differentiator factor across all insurance markets. Rather, it is used in the provision of only those insurance products that cover risks, which differ by gender, for example: accident risk, pension annuities, morbidity risk and mortality risk.

Risk-based pricing in the insurance industry is key to the efficient operation of the private insurance markets, but before further develop on the case, it is very important to highlight that just removing gender as rating factor does not necessarily achieve neutrality in insurance prices. Gender-neutral pricing would often be very costly, in not impossible, to achieve.

Sexual Discrimination and Insurance

Since the beginning of times that we live in a society where gender discrimination holds. In fact, men and women are seen and treated in different ways, with all limitations and privileges that it implies.
This fact that seems to be intrinsic to so many areas and environments, is also present in the business world, and of course in the insurance sector.

When setting prices for insurance products, insurers take into account several factors to ensure that their prices reflect the risks and other costs of provision. Gender is one such factor and has long been used by European insurers in pricing insurance products, covering risks that differ between men and women.

The EU Gender Directive of 13 December 2004 (Council Directive 2004/113/EC) provides for equal treatment between men and women in the access and supply of goods and services. While this Directive prohibits insurers from using gender in the calculation of premiums and benefits, it contains an exemption to this rule: Member States can opt out from banning the use of gender and can allow proportionate differences in insurance premiums and benefits where the use of gender is a determining factor in the assessment of risk based on the relevant and accurate actuarial and statistical data, provided that Member States ensure that such data is compiled, published and regularly updated. The regulations came into force on April 6th 2008 and appliance to insurance contracts entered from that date.
Under the regulations, the use of gender as a factor in the assessment of insurance risk must be based on actuarial and statistical data published in accordance with guidelines issued by the European Court.

In fact, the Directive was silent on how long this exemption could continue. It did, however, require those member states that chose to implement it to review their decision by 21st December 2012, five years after the Directive came into force.

Despite this objective justification, the use of gender in insurance pricing remains subject to debate at European level, and claims of unfair and unequal treatment between men and women in insurance provision continue to be advanced against insurers by some stakeholders.

On 1st March 2011, however, the European Court ruled in a test case that Article mentioned above...

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