Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • December 2012
12

UK insurers will cope with gender ruling disruption, says Fitch

Open-access content Tuesday 18th December 2012 — updated 5.13pm, Wednesday 29th April 2020

Imminent new European rules that will bring an end to insurance products being priced along gender lines will cause some disruption to British insurers but should allow them to maintain profitability, Fitch said today.

2

The change, due to take effect on Friday, is a result of a March 2010 European Court of Justice judgement which said the use of gender as a risk factor by insurers should not lead to individual differences in the premiums and benefits for men and women.

In a note, Fitch said UK insurers 'should be able to cope with the new requirements, despite the risk that gender-neutral premiums could distort pricing and introduce cross-subsidies between the genders'.

'We believe that insurers have the necessary underwriting and pricing expertise to maintain profitability, although there is likely to be some disruption for insurers while they adapt their systems to the gender ruling,' it explained.

To address the changes, insurers will need to make better use of other pricing factors to reflect the risk of each policyholder, Fitch said. For motor insurance, postcode, age and driving experience are expected to carry weight in setting premiums. The agency expects 'uneven' increases in motor price hikes, with younger, less-experienced female drivers likely to be worst hit.

Fitch expects a less dramatic impact on the life insurance market because the bulk of their business volume - joint-life products - generally have gender factored into their pricing already, while age and health are stronger indicators of mortality risk than gender and therefore carry more weight in pricing.

It does, however, expect changes to single-cover annuities where women pay around 10% more than men to reflect their longer life expectancy. 'The gender ban is likely to see this gap narrow as annuity rates fall for men and rise for women. For single-cover life protection, men may get a better deal when the ruling is in force,' Fitch explained.

Overall, Fitch expects the pricing shifts between genders to be unlikely to 'significantly' effect insurers' overall business volume and risk profile. In many cases, a lack of alternatives will mean customers just have to accept the new rates, while insurers may also look to pass implementation costs onto consumers.

The agency added: 'New premiums will likely include a loading to cover the unpredictable changes in the gender mix of the business and help offset potential increases in risks.'

This article appeared in our December 2012 issue of The Actuary.
Click here to view this issue
Filed in
12
Topics
General Insurance

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

New Fast-Growing Team - Actuarial Systems Development

London (Greater)
Excellent Salary Package
Reference
143762

Actuarial Pension Consultant – Scotland/Remote – Up to £90,000 plus bonus

Edinburgh / Glasgow / Remote working
Up to £90,000 + Bonus
Reference
143761

Part Qualified Pensions Actuary– Specialised Pensions Consultancy - Scotland/Remote - Up to £70,000

Edinburgh / Glasgow / Remote working
Up to £70,000 + Bonus
Reference
143760
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ