Human Rights in the EU: Gender, Insurance & the CJEU

CJEU.jpgThe Court of Justice of the European Union (CJEU) has ruled that from 21 December 2012, where insurance companies calculate risks, they cannot take into account the gender (male or female) of a person seeking to be insured as this is contrary to the objectives of the Equal Treatment Directive and incompatible with Article 21 and Article 23 of the European Charter of Fundamental Rights. The Equal Treatment Directive seeks to implement the principle of equal treatment between men and women in access to and supply of goods and services.  Article 5(1) of the Equal Treatment Directive  set down the general principle that in the calculation of insurance and related  financial services,  there should be no difference in the premiums or benefits solely on the basis of a person’s sex. Article 5(2) of the Equal Treatment Directive specifically permitted member states to allow sex be utilised as an actuarial difference in relation to calculation of insurance benefits and premiums after this deadline. However, a member state had to inform the European Commission that they would be implementing Article 5(2) (and effectively gain an opt out from Article 5(1)) and review the situation after five years (21 December 2012).

The Belgian Cour constitutionelle had requested a preliminary reference from the CJEU on questions relating to whether Article 5(2) of the Equal Treatment Directive was contrary to a number of provisions of EU law.  The CJEU in giving judgment relied heavily on provisions of the EU Treaties, the Charter of Fundamental Rights of the European Union and the aims and objectives of the Equal Treatment Directive in seeking to recognise the right of men and women to be treated equally.  In finding Article 5(2) of the Equal Treatment Directive contrary to EU law, CJEU relied on the expressed committment by member states to the principle of gender equality contained within several provisions of the EU treaties, including: the Union’s committment to tackling social exclusion, discrimination (Article 3 TEU); the EU’s aim to eliminate equalities and promote equality between men and women (Article 8 TFEU) and upholding the principle of equality between men and women in pay for equal work or work of equal value (Article 157 TFEU). The CJEU also refered to Article 21 and Article 23 of the EU Charter of Fundamental Rights and the general prohibition of discrimination on the basis of sex and committment to equality between men and women.

The Council of the European Union (formerly Council of Ministers) argued that the reason for differences in premium and benefits results from the different levels of risk that can be statistically proven exist between men and women in certain situations. However, the CJEU dismissed this argument preferring instead to rely on the high regard to which the principle of equality between the sexes has within EU law. The CJEU also expressed concerns with regard to the indefinite nature of the opt-out which member states could exercise, which the Court argued limited the effectiveness of EU measures on equality and non-discrimination.

One of the most commonly used examples of the relevance of this case is that of young drivers who seek car insurance. (The judgment has a greater effect than this one example provided, and also will affect calculation of pension annuities and life insurance). A young male driver, with no other discernible or relevant differences, would pay more for this car insurance than a young female driver of the same age. This was based on the fact that in general young men are regarded as being more at risk of claiming on their car insurance and being involved in accidents than women.

The judgment, from my point of view, certainly brings up some personal conflicting reactions. On the one hand, insurance can be viewed as people coming together and establishing a common fund to compensate in the event of a situation insured against coming to pass. (Ignore for a few moments the  amble profits gained for insurance companies). What is wrong with proportioning differential benefits and premiums to differing groups, based on general assumptions of behaviour in matters like this. So why not, for example, charge young male drivers more for car insurance.  On the other hand, why should statistics which show a correlation between gender and risk be allowed to presuppose general levels of risk solely based on some immutable characteristic such as gender? Should all young men who drive be regarded as having some sort of automatic pre-disposition to accidents which is not shared by any other group within society? Lets extend that logic, what if a correlation could be statistically proven between ethnicity and risk of a car accident. Should all those within that ethnic group be subject to a higher premium because a direct statistical link can be proven?

Media comment on this decision has generally being quite unfavourable, accusing the CJEU of trivialising human rights and  offending against common sense. While I certainly will not go that far, there is one issue which does trouble me about this judgment. Article 52 of the Charter of Fundamental Rights provides that limitations on the rights set down by the Charter should be proportionate, provided for by law, and must necessary and objectively meet objectives of the general interest recognised by the EU to protect the rights and freedoms of others. The drafting history to the Equal Treatment Directive is interesting in this regard. The European Commission (who is charged with initiating legislation within the EU) initially proposed that there should be no discrimination on the basis of gender in relation to insurance premiums and benefits, subject to EU member states having an opt-out for a maximum of six years. However, the Council of the European Union did not agree to this, and allowed an indefinite opt-out for member states. At no stage in the judgment did the CJEU at least consider this issue as relevant to Article 52. It could be argued that unisex premiums and benefits were considered in line with the passage of the Equal Treatment Directive at the time, were not deemed appropriate, and therefore an indefinite opt-out was allowed.  I am not necessarily stating that I agree with this argument. However, this should at the least have been considered by the CJEU in deciding whether this was a case where Article 52 of the Charter of Fundamental Rights could have limited the general right to gender equality in this specific area of law.

This judgment will not fully come into effect until 21 December 2012. However, for those who are concerned that the Sheilas’ Wheels girls will not have much to sing and dance about after this date, fear not, they will continue to delight/annoy (delete as appropriate) with their songs. For our international readers, here is what I mean.