Insurance premiums based on age could be illegal

European courts could soon rule against the calculation of travel insurance costs based on age.

Travel Insurance News - 06/06/2011

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The European Court of Justice may soon issue a ruling that travel insurance companies are no longer allowed to calculate the cost of insurance based on the age of applicants. A ruling like this could result in travel insurance premiums dropping substantially for many older travellers.

Courts recently ruled that it was illegal for insurers to base premiums on the gender of insured parties. As a result of that ruling, many are forecasting that premiums for auto insurance will rise substantially for women, while men are expected to enjoy lower costs.

Writing in recent issue of the newsletter of the Association of Financial Mutuals, lawers with Pinsent Masons wrote that the recent ruling by the European Court of Justice (ECJ) against the use of gender in the calculation of insurance premiums does not prevent insurers from using other personal attributes, like age, to calculate costs. However, as the lawyers point out, there are worries that assessing risk based on age would likely also be challenged at some point in the future.

An equality directive proposal that is nearly identical that that dealing with gender but which focuses on age is being drafted and should soon be presented to the ECJ. Though the draft offers the insurance industry an opt-out, this could be removed from the document, following the court’s ruling on gender.

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