The Gender Directive (2004/113/EC) establishes the principle of equal treatment between men and women in the access to and supply of goods and services, and prohibits direct and indirect gender discrimination outside the labour market. Under current Norwegian insurance legislation, insurers can however charge different prices to women and men for the same insurance products if gender is a relevant factor for the calculation of risk and proper pricing of the insurance product, provided the pricing is being based on relevant and accurate actuarial and statistical data. The exemption from unisex pricing is based on the possibility under Article 5 (2) of the Gender Directive to derogate from the unisex requirement with regards to individual insurance contracts.
In the Test-Achats case (C-236/09) of 1 March 2011, the EU Court of Justice concluded that Article 5 (2) of the Gender Directive was invalid under Article 21 and 23 of the Charter of Fundamental Rights of the European Union.
The aim of the proposed changes to the Norwegian Insurance Activity Act is to bring Norwegian insurance law in conformity with EU rules on unisex pricing, following the Test-Achats case. Gender is a determining risk-rating factor for a number of (individual) insurance product categories, such as life insurances, life annuities, accident and health insurances, and auto insurances. From 1 January 2015, it will be prohibited to use gender as a determining risk-rate factor for such insurance products. This does not imply that gender cannot be used in these products to calculate the overall risk and determine the required technical reserves. It implies, however, that gender cannot be used as the sole determining risk factor in calculating premiums. Other legitimate risk-rating factors such as, for example, the individual’s age and individual driving behaviour in auto insurance, or the individual’s age, health status and education in health insurance, may still be applied to calculate risk and premiums.
The Ministry of Finance proposes that the rules shall only apply to “new contracts” being concluded after 1 January 2015. The underlying contractual relationship will be essential in assessing whether a “new contract” is concluded. If renewal requires the consent of all parties, the contract will most likely qualify as a new contract. An annual or automatic renewal of an insurance contract will on the other hand not qualify as a new contract.
A voluntary transfer of a life insurance contract from one insurer to another will qualify as a new contract, save that transfers of life annuities and individual pension capital insurances with guaranteed benefits and profit sharing shall be excluded from this rule. Norwegian insurers have argued that voluntary transfers of insurance contracts should not qualify as new contracts, as they fear that the existing market for transfers of insurance contracts (which is a small market) will be further damaged. As would appear, the Ministry of Finance did not accept their arguments. It remains to be seen if the forthcoming changes will have any negative impact on the transfer market.