Price adjustment in compliance with the European Court of Justice’s recent ruling on gender-neutral premiums is not expected to have any significant impact on UK life insurers, according to global ratings agency Fitch Ratings. From December this year, insurers will not be allowed to charge different premiums based on gender, but Fitch believes that the majority of UK insurers have sufficient underwriting and pricing expertise to maintain profitability, and avoid any price distortions that could theoretically result. David Prowse, senior director of Fitch’s insurance team, said: “Mortality/longevity is the main risk in these markets, and insurers set their prices to reflect the risk for each policyholder. They currently use gender as one of their main pricing factors, given the proven link between gender and mortality.†He cited the example of annuity rates, which differ by approximately 10 per cent between genders, with women generally paying more to reflect their longer life expectancy. “However,†Prowse added, “as a consequence of the gender ruling, annuity rates look set to fall for men and rise for women. In contrast, men may get a better deal on protection, at the expense of women.†Premium and annuity rates for joint-life businesses are not expected to change significantly, although implementation costs may be transferred to customers via premium loadings. The primary area of uncertainty is likely to be indirect gender discrimination, whereby certain risk factors that have an effect on pricing â€" such as occupation â€" have a disproportionate gender mix. However, Fitch predicts that clarity in this area will improve, with legal input likely to play a major part. ShareThis Powered By iWebRSS.co.cc
Comments
Post a Comment