Insurers' own claims data, which they use to calculate different premiums for men and women, is likely to remain confidential when the Equal Treatment Directive is transposed into UK law.
The Equal Treatment Directive – due to be transposed by October 2007 – prohibits the use of gender as a criteria in the calculation of insurance premiums, but permits such practice where gender is a determining factor in the assessment of risk based on public data.
Until now it has been unclear whether data used to establish the general principle of treating men and women differently must be published or whether data used to calculate specific premiums must also be published.
The latter would mean insurers would either have to make their own data available to competitors or they would no longer be able to rely on their own claims experience.
Nick Kirwan, protection market director at Scottish Widows and head of the Association of British Insurers’ (ABI) protection committee, says legal advice has come back which suggests provided information justifying the principle of treating men and women differently is published, providers will be able to use their own data to refine premiums.
But he says providers will still need to show the difference in premiums is proportionate in a way which is transparent to consumers.
One proposal is the ABI could produce a set of standard tables which providers could use to establish the principle of different treatment, and Kirwan suggests this could be populated by age with a set index of 100.
This would mean a 20-year-old looking at a critical illness (CI) table may get a rating of 110 if they are female and 95 if they are male because there is a higher prevalence of CI claims among young women than young men.
Kirwan says the tables would need to be relatively simple so consumers could easily see why premiums on different insurance products are higher or lower depending on their gender.
Providers would then be able to use their own claims data to establish the exact difference between premiums, providing it is proportionate to the risk.
Another requirement of the directive is the government will have an obligation to ensure data is published, and Kirwan says it may consider giving the ABI a self-regulatory role for this purpose.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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