Equal insurance premiums for men and women across Europe

[Serafina]

German news article (i will post an english one as soon as i find one).

The European Court of Justice has decided that sex discrimiation will no longer be allowed for insurance policies. Until December 2012, all european insurance companies will have to offer unisex policies.
Statistical differences between men and women will no longer impact insurance premiums.
Regardless of whether women statistically live longer than men on average, they have to be offered an equal policy to men for their pension funds. Regardless of whether women have statistically fewer car accidents, men have to be offered an equal policy to women for their car insurances. This applies to similar cases as well.


Personally, i think this is long overdue. I just hope that insurances won't weasel out of it by increasing premiums across the board in all cases - tough it's quite obvious that they will rise in individual cases, such as those named above.

[Skgoa]

Personally, i think this is long overdue.

So do I.

I just hope that insurances won't weasel out of it by increasing premiums across the board in all cases - tough it's quite obvious that they will rise in individual cases, such as those named above.

Well, I hope that competition/the market will keep them from raising premiums to much, but I fear they are going to use this as an excuse to raise them much higher than they would need to offset the lost profit.

[Simon_Jester]

German news article (i will post an english one as soon as i find one).

The European Court of Justice has decided that sex discrimiation will no longer be allowed for insurance policies. Until December 2012, all european insurance companies will have to offer unisex policies.
Statistical differences between men and women will no longer impact insurance premiums.
Regardless of whether women statistically live longer than men on average, they have to be offered an equal policy to men for their pension funds. Regardless of whether women have statistically fewer car accidents, men have to be offered an equal policy to women for their car insurances. This applies to similar cases as well.

Personally, i think this is long overdue. I just hope that insurances won't weasel out of it by increasing premiums across the board in all cases - tough it's quite obvious that they will rise in individual cases, such as those named above.

I am a bit ambiguous about this, because we can generalize the principle a lot farther.

What about age discrimination? Twenty year old males pay much higher premiums than forty year old males on car insurance, because actuarial statistics show that twenty year old males get into a lot more accidents. Do we subsidize the greater number of accidents caused by people who are (biologically speaking) not yet out of adolescence at the expense of higher premiums for more mature drivers? Conversely, do we force companies to charge the same premium on life insurance to twenty year olds that we do to sixty year olds, ignoring the fact that sixty year olds are far more likely to die?

In general, what IS an acceptable grounds to distinguish between two groups of people on insurance premiums? Should private insurance become a state-enforced level playing field where everyone turns a blind eye to which policy-holders are the greatest risk? Are there areas where people who present a high risk should be expected to pay more for it?

[Jaepheth]

Weasling has nothing to do with it. This will result in higher premiums as a direct result of the math behind premium calculations.

You now have to assume that all persons are likely candidates for all diseases. (Women will have a probability of incurring the costs associated with testicular cancer, men have a probability of getting uterine cancer, Women will have an increased probability of getting heart disease, etc.) And that the costs of those treatments will be drawn out for a longer period of time (in the case of men).
And that's just health insurance.

Female drivers will see their auto insurance rise because they will now be in the same group as higher-risk young male drivers.

Insurance premiums are based on statistics of past costs and life expectancies of specified groups, not some sexist or racist worldview. By barring the use of information, you increase the asymmetry of information that has to be accounted for (one party knows more than the other)

[Dahak]

Statistical differences between men and women will no longer impact insurance premiums.

They will. It will become more expensive for everyone. The gender-specific risks are there and won't go away because a court decision, so someone will pay for those risks.

Personally, i think this is long overdue. I just hope that insurances won't weasel out of it by increasing premiums across the board in all cases - tough it's quite obvious that they will rise in individual cases, such as those named above.

But it is simply rubbish to make equal what is not 100% equal.
As mentioned above, women statistically have less accidents than men. Why should this not affect the insurance premium? Because it's unfair (boo hoo)?

[Rye]

But it is simply rubbish to make equal what is not 100% equal.
As mentioned above, women statistically have less accidents than men. Why should this not affect the insurance premium? Because it's unfair (boo hoo)?

Are you in favour of racial profiling too? After all, racial groups probably have some that are statistically worse at driving than others. I know in Britain there's several Pakistani fraud rings that arrange car crashes all the time.

[Dahak]

But it is simply rubbish to make equal what is not 100% equal.
As mentioned above, women statistically have less accidents than men. Why should this not affect the insurance premium? Because it's unfair (boo hoo)?

Are you in favour of racial profiling too? After all, racial groups probably have some that are statistically worse at driving than others. I know in Britain there's several Pakistani fraud rings that arrange car crashes all the time.

If the data shows a clear and provable statistical correlation, why should it not be used?
I guess a few fraud rings won't cause that huge an aberration to be noticable.

[Samuel]

But it is simply rubbish to make equal what is not 100% equal.
As mentioned above, women statistically have less accidents than men. Why should this not affect the insurance premium? Because it's unfair (boo hoo)?

Are you in favour of racial profiling too? After all, racial groups probably have some that are statistically worse at driving than others. I know in Britain there's several Pakistani fraud rings that arrange car crashes all the time.

No, that isn't statistically worse at driving- that is people commiting crimes. And insurance companies do profile where criminals pay higher premiums. I'm not sure if they do it by race, but they certainly have markers to help them sort out criminals from respectable citizens.

A better example would be if different racial groups had different rates of disease (which I think is true), but I'm not sure how good our information about that is, or how large a difference it makes compared to gender (where there is several years difference between men and women worldwide).

[Jaepheth]

There are areas of insurance where genetic profiling would be beneficial.

And we are paying the costs for ignoring that information.

Insurance is about groups, costs, and statistics. It doesn't care about causality, it doesn't care about morality, and it doesn't care about ideals. The more accurately you can identify a group an entity belongs in, the better you can predict what costs will be incurred and with what probability. Unfortunately, human behavior also plays a factor, and asymmetry of information creates liabilities that would otherwise not exist and costs have to rise to account for those.

[Rye]

If the data shows a clear and provable statistical correlation, why should it not be used?

If one easily identifiable section of the population has a disproportionate number of criminals or bad drivers, that doesn't make it appropriate to punish the arbitrarily defined section for the actions of those few who distort the stats. The last name "Patel" is probably wholly over-represented in the stats; that doesn't make it okay to blanket-raise premiums on all Patels.

I guess a few fraud rings won't cause that huge an aberration to be noticable.

Based on what? It costs the UK insurers and their customers £5 million+ a week.

No, that isn't statistically worse at driving- that is people commiting crimes.

No shit. But the insurance companies can't tell the difference.

[Simon_Jester]

Rye, let me repeat my earlier question to you.

In general, what IS acceptable grounds to distinguish between two groups of people on insurance premiums? Should private insurance become a state-enforced level playing field where everyone turns a blind eye to which policy-holders are the greatest risk? Are there areas where people who present a high risk should be expected to pay more for it?

Should women's insurance policies have to cover against the risk of testicular cancer, sharing this risk equally with men even though women do not have testicles? Should men's insurance policies have to cover against the risk of uterine cancer, sharing this risk equally with women even though men do not have uteruses?

We would hope that these things cancel out, more or less, in the long run- that women are not at a greater risk of getting sick and dying than men, or vice versa. But that still leaves the matter of age: should a sixty year old man be able to take out a life insurance policy and pay the same premiums as a twenty year old man? Should he have to pay the same premiums on his auto insurance?

Where, if anywhere, do you draw the line? When do insurance companies get to use information about their clients to make an educated guess about which clients are highest-risk?

In health care, this problem is unavoidable, because some people are simply worse risks for insurance. The logical solution is to scrap private insurance entirely and go to a single-payer system. Is that what you want for auto insurance, life insurance, homeowner's insurance, and other forms of insurance?

[Dahak]

If the data shows a clear and provable statistical correlation, why should it not be used?

If one easily identifiable section of the population has a disproportionate number of criminals or bad drivers, that doesn't make it appropriate to punish the arbitrarily defined section for the actions of those few who distort the stats. The last name "Patel" is probably wholly over-represented in the stats; that doesn't make it okay to blanket-raise premiums on all Patels.

Young drivers are such easily identifiable section that has much higher risk of accidents. Would you not make the premiums higher for those?
Either you "punish" those, or all, because the real costs of those accidents won't go away. So either the small group statistically responsible for it pays it, or all.

I guess a few fraud rings won't cause that huge an aberration to be noticable.

Based on what? It costs the UK insurers and their customers £5 million+ a week.

Well, "fraud rings" did not sound so huge that it would cost that much.
But then it's the task of the insurer to discriminate innocent users from criminal ones and investigate. If being Pakistani alone raises that risk a lot and they don't have other identifiers, I would say: tough luck...

[Jaepheth]

If one easily identifiable section of the population has a disproportionate number of criminals or bad drivers, that doesn't make it appropriate to punish the arbitrarily defined section for the actions of those few who distort the stats. The last name "Patel" is probably wholly over-represented in the stats; that doesn't make it okay to blanket-raise premiums on all Patels.

It's not arbitrary if that factor can be used to clearly distinguish groups that incur different costs.

Insurance is about contracts between the insurer and the insured. It's not a department store where everyone is buying the same product. Members of different groups are effectively buying different products from the insurance company because there's different probabilities that a payout will occur. Those probabilities, and thus the insurance premiums are drawn from statistics.

Again, the math doesn't care about what is fair. The question boils down to how much are you willing to pay, and ask others to pay, to prop up a moral ideal? An insurance company can make it as equal as you like, provided you're willing to fund that equality.


Side note: There is a movement (French in origin if I remember correctly) to remove age discrimination from insurance as well. If they succeed then someone age 21, at the start of their lives and without any savings or past earnings to speak of, will need to pay the same insurance premiums that an age 75 pensioner pays for health insurance.

[PainRack]

regarding fraud, companies already deny internet credit card sales for various countries due to the high incidence of fraud from those countries. So, profiling is already being done.

Shouldn't the real question be whether it would be better to average out the costs of healthcare or not?

[Rye]

In general, what IS acceptable grounds to distinguish between two groups of people on insurance premiums? Should private insurance become a state-enforced level playing field where everyone turns a blind eye to which policy-holders are the greatest risk? Are there areas where people who present a high risk should be expected to pay more for it?

I have no problem with ageism and prior faults in such a system. Sexism and racism are a step too far, however, and don't sit well.

Should women's insurance policies have to cover against the risk of testicular cancer, sharing this risk equally with men even though women do not have testicles? Should men's insurance policies have to cover against the risk of uterine cancer, sharing this risk equally with women even though men do not have uteruses?

Of course not. There's no sense in covering things which they literally cannot have. It doesn't really translate well to car insurance though, where everyone can crash or be crashed into.

Where, if anywhere, do you draw the line? When do insurance companies get to use information about their clients to make an educated guess about which clients are highest-risk?

Drawing the line at age and prior behaviour would cover the vast majority of risk assessment because it'd cover the vast majority of causes, both young and old. Recklessness and failing faculties would be covered, as these things have a biological basis and broadly predictable trends. Going from the stats and saying "okay, white people crash less, so white customers should get a white discount" is the old post hoc ergo propter hoc problem.

In health care, this problem is unavoidable, because some people are simply worse risks for insurance. The logical solution is to scrap private insurance entirely and go to a single-payer system. Is that what you want for auto insurance, life insurance, homeowner's insurance, and other forms of insurance?

Homeowner's insurance I think it would probably be a good thing. We find out after a few decades that half a village is in a flood plain after a river reroutes itself in a heavy downpour. House prices plummet, the people can't sell their houses, what the fuck are we meant to do? Let them become bankrupt? The government will have to intervene at some point.

[Jaepheth]

...Going from the stats and saying "okay, white people crash less, so white customers should get a white discount" is the old post hoc ergo propter hoc problem. ....

I don't think this is fully accurate. How is it a fallacious to use "whites cost less than blacks" to say that "whites cost less than blacks"?

Assume as fact that past statistics show that group A costs more than group B. If we assume this statistic holds in the near future (the whole point of applied statistics), then a contract from group C covering those costs is worth less to group B than the same contract to group A. At the same time the contract with group B is worth more to group C than C's contract with group A. Group C will therefore adjust the pricing to account for this. The insurance company is making no claim as to what causes the statistics, and it doesn't care what causes group A to cost more than B. If the distinction is bullshit, then the statistical difference in cost will be low, or vanish over time.

What distinguishes group A and B? Doesn't matter. black/white, male/female/ age 25 or 60, blond or brunette, name begins with a J or a D, height is 5'5" or 7'2", past criminal record or none. It just doesn't matter.

If you find a certain class of distinction distasteful and wish to bar its use. Fine... but it's likely you'll be paying more as a result.

[Thanas]

How the heck is it sexism or racism to say that one group lives longer and one group has more accidents, when both groups are not just some arbitrarily picked group? This ruling is a bad one which will cause a lot of premiums to go up. Because previously insurers had to justify premium raises. Usually they would do so by writing you a letter as to why. Now? The court has just issued them a golden opportunity. I fully expect to see a letter like "Dear Mr. Thanas, as we are now having to offer one fixed rate for all persons, we have come up with this new rate. Sadly, it is much higher for you because we cannot lower it now that you have to cover women as well."

Likewise, I do not for one moment believe my health insurance or life insurance premium will go down.

[Simon_Jester]

In general, what IS acceptable grounds to distinguish between two groups of people on insurance premiums? Should private insurance become a state-enforced level playing field where everyone turns a blind eye to which policy-holders are the greatest risk? Are there areas where people who present a high risk should be expected to pay more for it?

I have no problem with ageism and prior faults in such a system. Sexism and racism are a step too far, however, and don't sit well.

Should women's insurance policies have to cover against the risk of testicular cancer, sharing this risk equally with men even though women do not have testicles? Should men's insurance policies have to cover against the risk of uterine cancer, sharing this risk equally with women even though men do not have uteruses?

Of course not. There's no sense in covering things which they literally cannot have. It doesn't really translate well to car insurance though, where everyone can crash or be crashed into.

If we accept that men's health insurance doesn't cover the (nonexistent) risk of men contracting uterine cancer, and so on... you're going to end up with different premium calculations for the two sexes. They may be close but they won't be identical, because the risk factors aren't going to cancel out perfectly.

What do you do then? Do you establish a semi-permanent subsidy by which (let us say) women, who are at (on average) less risk of illness, subsidize men who are at greater risk?

Note that it is perfectly all right for you to answer this question with "yes," as long as you know you are doing so. The argument has to proceed to its logical conclusion; it cannot simply stop at "sexism is bad!"

Where, if anywhere, do you draw the line? When do insurance companies get to use information about their clients to make an educated guess about which clients are highest-risk?

Drawing the line at age and prior behaviour would cover the vast majority of risk assessment because it'd cover the vast majority of causes, both young and old. Recklessness and failing faculties would be covered, as these things have a biological basis and broadly predictable trends. Going from the stats and saying "okay, white people crash less, so white customers should get a white discount" is the old post hoc ergo propter hoc problem.

If I can demonstrate a difference in risk between eighteen year old males with no history of traffic accidents and eighteen year old females with no history of traffic accidents, what then?

In health care, this problem is unavoidable, because some people are simply worse risks for insurance. The logical solution is to scrap private insurance entirely and go to a single-payer system. Is that what you want for auto insurance, life insurance, homeowner's insurance, and other forms of insurance?

Homeowner's insurance I think it would probably be a good thing. We find out after a few decades that half a village is in a flood plain after a river reroutes itself in a heavy downpour. House prices plummet, the people can't sell their houses, what the fuck are we meant to do? Let them become bankrupt? The government will have to intervene at some point.

Fair enough. At what point?

Do we encourage people to build houses on ground prone to earthquakes, floods, and mudslides? If the state is obliged to protect people from the costs of these disasters, the state also has a legitimate interest in discouraging people from building carelessly in areas that are vulnerable to disasters. How do we implement this? Or do we establish a permanent subsidy flowing one way from those who choose not to live on a flood plain towards those who choose to do so?

[FTeik]

And once again the opposite of "well done" is "well meant".

Can I ask this court to rule, that my statistical life-expectancy will be as high as a woman's?

[Big Phil]

Perhaps we should apply the logic in this ruling to the criminal system in Europe as well.

Everyone receives the same sentence - 30 years in prison without the possibility of parole - regardless of the crime committed. Murders, burglars, and parking violators will all receive the same sentence.

Ticketed for jaywalking - 30 years
Littering - 30 years
Eight year old caught stealing a toy - 30 years


That way we can be sure there's no racism, sexism, ageism, or any other ism's involved

[Zed]

This isn't a parallel to that situation. The parallel would be giving harsher sentences to men than women - or harsher sentences to black people rather than white people - for committing the same crime. Men and women are paying for the same service, therefore they pay the same price. The fact that there are some probabilities favoring one gender above the other doesn't invalidate that. If you wish to allow the insurance industries to use all information it can find, they'd demand genetic profiling before providing life insurance - and noone with a genetic inclination towards heart attacks will be able to buy life insurance at a reasonable price. The government is correct to restrict the criteria that can be used in determining fees.

[Jaepheth]

Lets say there's a standardized exam for which we know the following:

Historically, whites pass with probability .8
Historically, blacks pass with probability .6

Now we take a hypothetical classroom with white and black students in equal number and ask contestants to split $200 into wagers on each student which pays out if that student passes the exam. If we ignore race and hedge evenly across all students, our payout is 100*.8 + 100*.6 = $140. If we use the historical data to our advantage, distasteful as it may be, we get an expected payout of 200 * .8 = $160

It would be fallacious and racist to say that the exam proves whites are smarter than blacks.

Is the exam racist? Do socio-economic conditions contribute to the discrepancy? Does the grader randomly assign scores based on the students' name?
Perhaps, but for the purposes of betting on the outcome of that exam we don't care about causation, only that a correlation exists.
The person who uses all available information will gain an advantage over those who do not.

If you'd like to argue that insurance should ideally be handled by a non-profit nationalized monopoly... then I agree, but that's a different debate.

[Serafina]

Everyone arguing in favor of keeping the old system has been using arguments that might as well be used to justify pre-existing conditions like they exist in the USA.
They use the exact same logic - screen for high-risk groups and either charge them more or kick them out. This is of course good for the premiums of all others - so it must be right?

Granted, this decision could throw off the insurance system for a few years or such. But i don't see any serious long-term problems.

[Simon_Jester]

Everyone arguing in favor of keeping the old system has been using arguments that might as well be used to justify pre-existing conditions like they exist in the USA. They use the exact same logic - screen for high-risk groups and either charge them more or kick them out. This is of course good for the premiums of all others - so it must be right?

Please remember that I'm in favor of a single-payer system for health care, which renders all questions of who is a big risk totally irrelevant.

But for things like auto insurance, homeowner's insurance, and life insurance... how do you handle a system where X's premium doubles to pay for risks taken by Y? What stops X from opting out of the system?

Unless you federalize the whole industry and make all insurance state-run single-payer, how do you deal with that?

Granted, this decision could throw off the insurance system for a few years or such. But i don't see any serious long-term problems.

It'll sink the system if this standard is applied to ban age discrimination; the need for differing kinds of insurance is very strongly determined by age. If a life insurance policy costs the same in your twenties that it does in your sixties, nobody under fifty or so will buy life insurance at all; it simply won't be a sound investment.

And having banned sex discrimination in insurance policies, how do you not ban age discrimination?

[Serafina]

But for things like auto insurance, homeowner's insurance, and life insurance... how do you handle a system where X's premium doubles to pay for risks taken by Y? What stops X from opting out of the system?

Maybe the fact that X, being a sensible person, needs that insurance just in case as well? Or in the specific case of auto insurance, the fact that it is legally required in many countries in order to operate or own a car?

That specific point, that many insurances are legally required, is something that should be enough to prohibit racial or sex discrimination. Without it, it would be more expensive to own a car just for being a man, regardless of ones personal conduct. I do not object to raising premiums when said man has an accident, but i do object to him paying more just due to his gender.
Now there are also a lot of insurances that are virtual necessities, such as general liablity insurance, homeowners insurance and whatnot. Now we might argue about when exactly an insurance qualfies as such - the point is that it makes little difference if they are legally required, you absolutely need them anyway. And discrimiating against a group, rather than a person, on something that is just such a basic requirement is wrong.