For more than a year now, Colorado law has required health insurance carriers to disregard gender when setting premiums. ?In the past, men and women paid different premiums based solely on gender, even if all other factors (health status, zip code, age, etc.) were equal. ?When that law was being debated in the state legislature, opponents compared the gender-based pricing rules with those used by auto and life insurance carriers and noted that gender-based pricing helped to keep premiums as accurate as possible for both men and women, based on their average utilization of the insurance coverage. ?Supporters noted that in the interest of fairness, it made more sense to price insurance policies without regard for gender.
Although the Colorado law banning gender-based premiums passed in 2010 and went into effect in 2011, it only applies to health insurance. ?Auto and life insurance policies have long considered gender when setting premiums, and they continue to do so.
But that is not the case everywhere. ?In a far-reaching ruling, the European Union’s high court handed down a ruling this week banning the use of gender-based pricing for all insurance contracts and pension plans. ?So life insurance premiums (and premiums on all other insurance contracts and pensions) in EU countries will have to be adjusted by the end of this year to reflect unified pricing for men and women.
Given the precedent set by the Colorado law regarding health insurance and now a large international ruling from the EU, it will be interesting to see if we eventually end up with gender neutral pricing for life insurance as well. ?Time will tell.