Age limits in insurance contracts: landmark ruling in Austria against age discrimination
A recent decision by the Austrian Supreme Court challenges arbitrary age limits and unfair treatment of older people in access to insurance products. Although we still lack an EU directive covering this field and Austria also lacks dedicated legislation prohibiting age discrimination in access to financial services, such as insurance, this ruling shows that Courts can effectively close gaps in the protection against discrimination.
On 25th November 2020, a landmark ruling was issued in Austria with regard to age discrimination in insurance contracts. The Austrian Supreme Court ruled that several contractual provisions contained in a private accident insurance policy were inadmissible. Of particular importance is the dismissal of a contractual provision that stipulated that insured persons from the age of 70 onwards would have their coverage reduced by 30% in the event of a claim. In the case of a 77-year-old woman from Linz, the clause led to a reduction of the disability benefit after an accident from 7,664 Euros to 5,365 Euros. The Supreme Court thus did not follow the insurance company's argument that the reduction was objectively justified because the consequences of the accident were likely to be more severe in older persons, their injuries typically heal worse and are therefore more expensive.
In addition, the Supreme Court declared unlawful a clause, whereby policyholders who have reached the age of 75 would receive a monthly pension instead of a one-time payment of the full insurance sum in case of permanent disability caused by an accident. As a result of such a clause, the same women from Linz would not receive 5,365 Euros as a single payment, but a monthly pension of 41 Euros. In this way, the home conversion required as a result of the accident would not have been possible.
According to the Supreme Court, this clause was unlawful, because it was not reasonable and obviously disadvantageous for policyholders who had paid premiums for many years to receive a possibly lower monthly payment instead of the full sum insured "simply because they have reached a certain age limit".
Link to the ruling (in German)