Unisex Insurance Pricing: Consumers' Perception and Market Implications

The main reason that individuals have different insurance premiums and benefits is that they have different statistically proven risk factors that are used in actuarial calculations. The judgment of the European Court of Justice on March 1, 2011 concludes that any gender-based discrimination is prohibited and that equality between genders must be ensured in the European Union starting from December 21, 2012. Until then, gender-specific premium differentiation is allowed in most European Union Member States for risks that are strongly linked with gender. We discuss the relevance of price differentiation criteria from the point of view of insurers, regulators and ethics and reflect on the degree of acceptance of such price differentiation by consumers', which is assessed empirically through an international consumer survey conducted in the United Kingdom, Germany, France, Italy and Switzerland. The perception of risk factors and of effective gender-related price differences is considered in motor, annuity, term life and health insurance. Our results indicate that even if the gender criterion is one of the least accepted pricing factors, consumers consider it far less discriminatory than was judged by the European Court of Justice. Finally, we discuss possible consequences of the new regulation for the insurance industry.