Association Belge des Consommateurs Test-Achats ASBL and others v Conseil des Ministres (1st March 2011) ECJ

Given the rather unwieldy case name of this decision, it is perhaps hardly surprising that it became widely known as the “Sheila’s Wheels” decision.   So-called because of the practice of offering women a reduced insurance premium as statistically they had fewer accidents (or at least, accidents resulting in insurance claims).
 
The decision made headlines because it decided that it was a breach of EU law to take the sex of the insured person into account as a risk factor in the formulation in insurance contracts, such as annuities.  This decision cannot be appealed.

It was argued that the practice of reduced premiums for women was not discriminatory as the statistics showed that women had better accident records than men therefore it was simply an actuarial issue which it was legitimate to factor into a premium rate consideration.

However, the judgment said that “… the use of sex as an actuarial factor should not result in differences in individuals’ premiums and benefits.”

This decision will undoubtedly affect pension annuities, life assurance premiums and income protection policy rates AND (by extension) the approach set out in the Ogden tables. 

As we know, there are gender differentials in the Ogden tables but as practitioners these differentials are merely viewed as just being “one of those things”.   But the impact in damages between men and women give identical facts can be startling:
 
Woman 35:  Not disabled : Employed (GEA) Table C discount   = 0.86
Man 35 :  Not disabled : Employed (GEA) Table A discount   = 0.90

Although the differential in  “raw‟ multipliers (not discounted) favours women to 65, when one factors in the discount rates, the balance tips in favour of men.  EG:

Multipliers at age 35 :  20.53 (men)  vs  20.78 (women) [@ 2.5% discount rate].

But when the discount factors are applied on an identical notional income of £25,000 the overall impact is negative concerning women.  Therefore to 65 the respective calculations are:  

Men: £25,000 x (20.53 x 0.90)   = £462,000
Women : £25,000 x (20.78 x 0.86)    = £447,000

The women’s income to 65 is reduced by £15,000 merely by reference to her gender.  This outcome is undoubtedly ripe for challenge in light of the ECJ decision above.

Article by Colm Nugent