Non-Discrimination and Unisex Tariffs

Concept

The insurance non-discrimination rule is based on the EU Equal Treatment Directive (2004/113/EC) and prohibits insurers from differentiating premiums and benefits directly based on the sex of the insured person. It was triggered by the judgment of the Court of Justice of the European Union in the Test-Achats case (2011), which declared the previously permitted exception for sex-based rating incompatible with EU law. Since 21 December 2012, insurers within the EU – including Austria – must offer gender-neutral unisex tariffs for newly concluded contracts.

Affected lines and exceptions

Life, pension, and health insurance are most affected, as premiums and benefits in these lines were traditionally calculated on the basis of sex-specific mortality and morbidity probabilities; women and men have since paid the same premium, or received the same benefit, for comparable cover. The prohibition applies exclusively to sex as a rating factor – other risk-relevant characteristics such as age, health status, or smoking behaviour (non-smoker tariffs) may continue to be differentiated.

Relevance for insurance practice

The introduction of unisex tariffs led to sometimes significant premium adjustments, particularly in pension/annuity insurance (women’s higher life expectancy has since also affected the annuity level for men) and in term life insurance (men’s higher mortality has since also affected premiums for women); intermediaries need to understand this system change to correctly advise existing clients who still hold older, sex-specific tariffs.