In recent months, changes to equality law have been implemented to harmonise the law in the UK with the rest of the EU. Equality law is wide ranging in scope and its remit applies to financial service institutions such as insurance companies. The law requires insurers to not discriminate unlawfully in relation to protected characteristics such as sex and age.
From 21st December 2012 due to the implementation of a European Court of Justice decision, insurers will no longer be able to use gender to help calculate premiums and benefits.
The change in equality law has been highly publicised in relation to car insurance, where women drivers now have to pay comparable premiums to men.
Private medical insurers have historically seen women as slightly lower risk than men. This has meant women may be able to obtain cheaper medical insurance premiums than their male counterparts. However, since 21st December 2012 the price of medical insurance for women has increased to fall in line with that of their male counterparts.
In contrast, this year male policyholders may find themselves with a slightly reduced premium.
The law aims to protect people from being unfairly discriminated against due to their age. While this has a clear cut application in terms of employment law, the impact of the law in relation to insurance is more complicated. The government recognises that in this sector the rights of individuals must be balanced against the needs of insurers to make sensible decisions, based on analysis of the risk factors.
Like it or not, as we age our health often begins to deteriorate. This means the older we get, the higher risk we become to medical insurers. Its an undeniable fact that older policyholders make more claims, resulting in insurers paying out more money for claims and thus justifying higher premiums.
Although age discrimination is unlawful, insurers are still able to calculate premiums based on a policyholders age. Arguably failure to do so is manifestly unfair to younger policyholders, who would have vastly increased premiums which could make their insurance unaffordable.
Currently this means as you age and your risk grows, your medical insurance premium will also increase.
The constant evolution of the British legal system means the law is ever changing. Equality law in particular is a hot topic. Judgements in the European Court of Justice have forced the UK to implement legislation to come into line with European law. However, with new cases reaching the court each day now, it could only be a matter of time before a fresh judgement once again brings this area of law into disarray.
Regardless of the impact equality provisions have on your premium, ever rising medical costs play the most significant factor in increasing premiums year on year. So even if the law does change in your favour, the financial benefits this will bring to your premium could still be rather muted.
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