Fitch – Gender Equality won’t affect UK life insurance
A new report from Fitch, one of the leading ratings agencies has revealed that the new EU rules regarding gender neutral insurance costs should not have a significant effect on the price of life insurance offered in the UK, despite experts predicting to the contrary.
According to the report, the new ruling should not make a massive difference to the business models already in place in the UK, as many life insurance firms are already well equipped to deal with the changes, and the different pricing structure should have little impact.
Fitch did however admit that policyholders taking out policies after 21st December would end up with different premiums than before, with men potentially paying slightly less, and women paying slightly more.
Whilst women will lose out when it comes to life insurance, we’ll see a large difference in the annuity market, where women will no longer be offered lower annuity payments, as a result of the ruling. Whilst men are more likely to die at the moment, they are also paid more each month by their annuity.
It is likely that life insurance firms will make changes to their policy pricing structures in other ways, according to the report, such as health issues and the age of the applicant.
According to the report, the price differences already in place because of gender are far less significant than the impact age and health can have on a policy, so the report doesn’t expect prices to change very much either way.
The report also acknowledged that many people have joint life insurance policies, where both halves of the couple are covered, but pay one premium, so the increase in the cost for women will be countered by decrease in the cost of insurance for men, leaving customers paying the same anyway.
Senior Director of Insurance at Fitch, David Prowse explained, “Most protection customers have a clear need for life cover, often in connection with a mortgage, and will have little option but to accept the post-gender-ruling premium rates available.”
Whilst Fitch don’t believe the changes will have an impact, financial advisors still do and a third believed the increase in life insurance costs would be between 10% and 25% in the next year.