The European Court of Justice (ECJ) has ruled that insurers cannot charge different premiums to men and women, based on their gender.
The decision means the cost of car insurance will change for both men and women, as women will no longer be charged lower prices. Prices for men could drop and rise for women.
Although the change will not come into effect until 21 December 2012, insurers could start changing premiums in the meantime.
The change in the law comes about because a Belgian consumer group Test-Achats argued that charging different insurance prices to men and women contradicted wider European principle of gender equality.
The ECJ said: “Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination”.
Extra 400 pounds
The group most likely to see a hike in their premiums are women under 30, who could see their insurance costs rise by 25-30%, which could add around £400 a year. Men could see a 10% drop in their costs.
Women have traditionally paid less than men for their car insurance due to their longer life expectancy and based on road accident records of the sexes. This verdict will likely force changes in the current standard practice across Europe of basing insurance rates on these statistics.
Maggie Craig, acting director general of the Association of British Insurers (ABI), said: “This gender ban is disappointing news for UK consumers and something the UK insurance industry has fought against for the last decade.
“The judgment ignores the fact that taking a person’s gender into account, where relevant to the risk, enables men and women alike to get a more accurate price for their insurance.”