This European Directive will see the use of gender as a factor in setting insurance premiums prohibited. This will take effect from 21st December and will affect all types of insurance including life insurance. From that point on insurers will have to price male and female policies at the same level (all other things being equal), despite the fact that women tend to live longer than men.
That equalisation in premiums could have a particularly big impact for women and see premiums lift overnight. In fact, last week Legal and General became the first provider to switch to gender neutral pricing.
This gave the first insight into just how big an impact the new pricing structure could have and it certainly seems to prove that it will be women that will bear the brunt. Reports suggest that Legal and General’s life insurance premiums will have risen on average by 23% and life and critical illness by 9%. At the same time male premiums have dropped on average by 3% and 4% respectively.
With more providers set to move to gender neutral pricing before the deadline of 21st December the time is ripe to make an application and avoid missing out on the currently cheaper premiums for women. With some applications requiring further underwriting and the provision of medical evidence from a GP it is important not to leave it to the last minute.
On top of the Gender Directive insurers face taxation changes in January which will also push up their costs. Those costs are of course likely to be passed on to customers acting as a double whammy and another reason not to delay taking cover.