ECJ impact still uncertain

Many insurance firms have made gloomy announcements about the likely impact of the European Court of Justice Gender Ruling since it was mooted in late 2010.

But for the first time it has hard figures to back up these claims, along with a range of more measured predictions about the additional headaches the ruling is likely to cause.

This new information, published by the Treasury from responses to a consultation on the ruling, is sobering reading.

Let’s start with the figures. Insurers said that the ruling was likely to cost them between £200,000 and £1.1m each, with others putting the cost at several millions.

This cost is less than many individual firms were expecting, even if the combined cost to the industry is vast. But these figures are the tip of the
metaphorical iceberg.

Now, onto the predictions. The really interesting – and most significant – part of the Treasury document is the range of problems that are almost certain to arise but are almost impossible to put a figure on.

These include the cost of compensating customers, having to hold extra capital and working out how to set up a gender-neutral strategy.

All of these will raise costs for the industry above and beyond the conservative figures already mentioned. Making sure they are gender-neutral will also suck away a lot of insurers’ time - and time is money.

The truth is that the real impact of the Gender Ruling will not become clear until it comes into force and drivers start coming up for renewals.

Foreseeing how they will react is difficult, as is predicting which strategies other insurers will deploy to hoover up consumers during a period of market turmoil. Roll on 2013.