Men and women of the same age are often charged different premiums for the same level of insurance cover, or offered different benefits for the same premium. The reasons for this are related to the likelihood of a man and a woman making a claim being different and the fact that the average lifespan of men and women are expected to be different together with other physiological differences and risk factors.
Currently the Equality Act 2010 specifies the circumstances in which insurance companies can charge different premiums or offer different benefits to men and women under individual insurance and pension contracts.
In particular, the Equality Act 2010 permits insurance companies to charge different premiums provided that this is based on accurate actuarial and statistical data relevant to the use of gender as a risk factor and such data is compiled, published and regularly updated in accordance with guidance issued by the Treasury. The latest Treasury guidance was published on 7th March 2008 and governs insurance contracts which commenced on or after 6th April 2008.
We are therefore obliged by law to share with you data which justifies why we differentiate between males and females.
This data is supplied by the Continuous Mortality Investigation (CMI), which carries out research into mortality and morbidity experience on behalf of the UK Actuarial Profession. The base data is supplied by life insurance companies covering a large proportion of the market - available below:
CMI data by age and gender: life assurance and annuities
For a number of reasons, it is not possible to draw conclusions from the information in these tables about an individual customer’s premium or annuity rates. For example:
The data we have published represents an industry average whereas we are allowed to use our own data in setting our premium and annuity rates.
There are other factors that are taken into account in calculating premium rates, such as expenses and investment returns which do not vary by gender.
Indeed the Treasury’s guidance states: "This data must demonstrate the case for differing treatment based on gender, but it is highly unlikely to present a direct correlation with the premiums charged or the benefits obtained in individual cases."
UK legislation is currently under review following recent EU rulings, which will lead to changes in the approach permitted from 21 December 2012.
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