Getting the Balance Right III Event: The Use of Age Limits in Insurance

On 19th April, AGE attended a high level event organised by the insurance company Swiss Re to discuss how to effectively strike a balance between anti-discrimination policy in the EU and the assessing of risk in the insurance sector using factors such as age, health and disability.

‘Getting the Balance Right III 2016’ was attended by representatives from the European Commission, European Parliament, insurance companies, actuaries and civil society organisations. There was a wealth of high level speakers in attendance who dealt with broad and important topics such as whether the use of age in insurance was discriminatory or necessary and how to appropriately use someone’s health or ability status for individual insurance products and risk selection.

Age, disability and health are all factors that can be used by insurance companies to calculate risk and premiums. Sex was also a factor until the Gender Directive was implemented by the EU in 2004, inclusive today of an important 2011 European Court of Justice ruling (Test-Achats), which clarifies that sex may not under any circumstances be used as a factor in the calculation of insurance premiums. EU policy currently prohibits discrimination in access to goods and services (like insurance) on the basis of gender and race, but not yet on the basis of age, health or disability. The Draft Horizontal Directive on Equal Treatment would plug this gap but it remains stuck in negotiations at the Council of the EU and has not yet been adopted.

One of the key conclusions of this event was that while it is not inherently discriminatory to calculate insurance risk based on the factor of age, it becomes so when this leads to undue differentiation or the exclusion of older people from purchasing certain products. This will make the aforementioned Horizontal Directive different from its gender-related predecessor, because it will include exceptions allowing for the use of age in determining insurance risks. Significant attention must then be paid to any such exceptions, which need to be based on proportionate, reliable, actuarial, up-to-date and transparent statistical or medical information that has been obtained through the adequate collection of data and the provision of good customer service by insurance companies. If any of these conditions are missing, there is a risk that exceptions will be based instead on stereotypes or assumptions and could thus be discriminatory.

Health and disability are also complex areas for insurers, who aim to offer competitive premiums for their customers without making financial losses. An important point made on this topic was that disability should not be treated synonymously with health. A person who is deaf but otherwise entirely healthy, for instance, must not be unfairly penalised for their deafness when applying for insurance because this would be disproportionate and discriminatory. Similarly, a woman who has suffered and recovered from breast cancer, for example, should not continue to be charged higher life insurance premiums indefinitely. It was acknowledged that health and disability were more difficult for insurers to measure than age, highlighting again the need for better data to prevent undue discrimination.

AGE Platform Europe continues to urge the Council to conclude its negotiations on the Horizontal Directive as soon as possible so it can be adopted, exceptions clarified and older people in the EU better protected from discrimination in access to goods and services.

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