The Emerging Issues about Insurance Law in Europe - Essay Example

Insurance Law Background Information This is a law paper that discusses the emerging issues in reference to insurance law, in Europe. It is evident that the region’s community organization is not comfortable gender inequalities arising in different fields of life. Calculations of insurance premiums as well as, insurance benefits are one of these key areas. They also entail healthcare among others. Law bodies have been working on designing suggestions to improve the situation at hand. It has impacts in different nations both which have incorporated the idea in their legislation and those who are yet to take the step (Felipe, 2010). Introduction This is a term that refers to undertakings encompassing insurance. These include insurance claims and policies. This section of law has three categories, which entail regulation of claim handling, regulation of details of insurance policies, and regulation of enterprise insurance. Claims all over the world are pushing for unisex premium basis to bring about equality in gender. This is in reference to reports from different stakeholders all over the world. Different law bodies suggest that it will be illegal from 2013 for any insurance company to base sex as risk fact in premium calculations ( Athearn, 2007). It is discouraging for top insurance companies to take initiatives of offering preferential insurance premium to women drivers. Insurance firms should aim at creating true equality in the whole concept of determining insurance rates. This is an art grounded squarely, while referring to risk-avoidance statistics. In reference to the traditional premium calculation, the rates reflect the level of the risk of the insured by the insurer. In these calculations, there are many aspects taken into accounts, these include claims expenses and cost payments from the insured, location and age of the insured, model of the vehicles, security fit of the insurer, and the profit margin of the insurer (Felipe, 2010). In evaluating the extent of the risk, the insurer analyzes the breakdown of claims into different subsection; in many insurance firms, sex is a factor in the calculation of the premium. Legal bodies argue that, insurance companies should not base their calculations in reference with the statistics. It is true and evident that the world’s statistics show that, male drivers, specifically young drivers experience more accidents per capita than female drivers. This means that female risk equivalent is less, than that of male drivers; that is, in reference to the same area, same car, similar driving experience, and same knowledge of the environment. Below are statistical records in reference to males and accidents: 1. Men are likely to perpetrators of fatal accidents 3 times higher than women 2. Men are victims of 80% of the over speeding fines in the Europe 3. Records shows that 44% of men use mobile phones when driving unlike 30% of women 4. About 20% of men fall asleep while driving unlike women who cover 6% 5. Between 2003 and 2008, 93% of accidents victims are men In reference to statistics, it logical for insurance firms to base sex as a factor for premium calculations. Discrimination and Insurance Theory In reference to research, it is surprising to know that there is a relationship between actuarial science and discrimination. Discrimination- this is the sensory and cognitive ability or capacity to see charge perceive and discriminations differences between subjects, concepts, objects, and patterns. Actuarial science- this is a field of study that applies statistical and mathematical methods in evaluating and analyzing the level of risk in the financial and insurance industries. In the above definition, it is evident that there is some relation on the basis of common grounds. This is the ideology under discussion on this article. It is unfair to base sex as a factor in premium calculation (Wagner, 2010). Critical appraise Appraise is an evaluation of a situation. The evaluation must be base on critical thinking, research and other supportive information. In reference to the case, in this law article, it is evident that European Court of Justice has been perpetuating practices with unfair basis. All over the world there have been campaigns enforcing gender equality in all spheres of life. The spirit leads to integration because fairness is dominant all around the world (Eassie, 2011). From the article, it is evident that the European court f just has been unfair in ruling insurances cases. This is because it should follow the outline of unisex law in reference to cost and risks. Statistics shows that men are open to more fatal risks than women. This is in their duty as men; their activities demand courage and at times sacrifice. There should be an impaction of fairness, because this is an act of God (Felipe, 2010). In reference to article 6, the treaty with the discussion on the Treaty on European Union, the organization emphasizes respect for human rights, liberty, democracy, and rule of law. These are the principles of the members’ states, which respects key rights in reference to the provisions made by European Convection of Human Right Protection and Fundamental Freedoms. From this, we can clearly analyze that equality is a common principle in the European Union. Further declarations are evident in the articles 21 and 23 of Charter Fundamental Rights; the discussion is on the prohibition of any discrimination on sex grounds. There is further emphasis on equality between both sex groups in all fields of life ( Hansell, 1996). Article 2 of the same treaty emphasizes that, European community promotion of such equality is essential in community development. Article 3(2) of the European Treaty, encourages the community to aim at suppressing gender inequalities, and fight for equality between men and women in all fields of life (Wagner, 2010). To suppress and eliminate sex based discrimination, the directive has put forward a strategy that applies both direct and indirect discrimination. Direct discrimination entails instances where an individual gives another a favourable treat, as opposed to another individual who gives a comparable treat. Although risk categories vary in reference to sex, sex is not necessarily the main factor or a factor of determining the risk extent of the insured by the insurer (Insurance law, 2008). Members of the European community should design exemptions in the unisex benefits, and premium rule, as far as they will ensure that underlying statistical, and actuarial data should be up to-date, reliable, and readily available to the public. These exemptions should be available to the nations which have not yet made the new principle available in their legislation (Wagner, 2010). The principle is applicable in the calculation of benefits. An ideal example is a case where the premiums paid by a female driver are equal to those paid by a male driver. The same basis applies when calculating the benefits. The principle ensures that both men and women receive equal amounts in compensation terms, if an accident occurs. With reference to the European Union Law, a gender based risk factor and payment assessment is prohibiting to law. Calculations of premiums should not take into account the risks factors involved with individuals, either male or female. A Directive 2004/113/EC (1) prohibits all kinds of discrimination involved in gender, in the access to products and provision and services. It states that an individual despite the gender should not be limited in access to privileges. The Directive in philosophy limits the use of sex as a consideration in the computation of insurance premiums and claims. This is so as sighted in insurance contracts that were engaging in after 21st December, 2007. In relation to derogation, the Directive dictates as from 21st December 2007. 21st December 2012 gives a five year period for the bill of the Directive to be passed into national law in European community. This also in turn dictates that Member States must re-draft the justifications of the exclusions, considering updated statistical and actuarial data and a submission report by the Commissioner three years after the passing of the Directive into national law. A plaintiff and two individuals appeared before the Belgian Constitutional Court to present an action for the annulment of the Directive. The Belgian court requested the Court of Justice to evaluate the validity, in reference to the provision of derogation in the Directive, in the areas of virtues of principle of equality for both women, and men enshrined in the European Union law (Felipe, 2010). Today, a court's judgment basing on the Article 8 TFEU, the European Union aims in all of its activities, to cut out inequalities and for equality and balance between men and women. On the road to achieving gender equality, it is up to the EU legislature to state. In regard to the growth of social and economic conditions within the EU, it is indispensable to consider the accuracy. By setting a date, 21st December 2012, according to the Court ruling that the EU legislature to provide in their Directive, the differences in amounts in premiums and claims arising from basing sex as a factor in their computation should be abolished. At a time, adopting the Directive, the use of actuarial based factors related to gender is common in the provision of insurance policies all over the world. It then becomes permissible for the legislature to apply the law of unisex premiums and claims gradually, with periods that favoured transition. The court in turn, grants Member States the option of coming to a decision before a date, 21st December 2012, to allow proportionate differences in an individual’s premiums and claims. This is where in relation to statistical and actuarial data; gender is as a basic deterministic factor in evaluation of risks (Wagner, 2010). Whatever decision that makes to make use of the above option has a five year ultimatum to be reviewed i.e. 21st December 2007-21st December 2012. The decision takes into consideration a submitted Commission report. A Member State that has used the option has an allowance to let insurers make use the unequal treatment with the advantage of temporal limitation (Steptoe and Johnson, 2009). The Court justifies that; possible risk might arise, if the EU law allow the derogation from the fair and equal treatment of both women and women, as referenced by the Directive, for persistence indefinitely. This is an added advantage to Member States enabling them to persist without temporal limitation. An exemption from the law of unisex premiums and claims, that works against the fulfilment of the goal of gender equality. It is then to be considered invalid when the transitional period expires. The Court has its stand that, in the sector of insurance company services, the revocation from the general law of gender based premiums and claims are invalid as from 21st December 2012. Case scenario In reference to the European Union Court ruling to allow for gender balanced assessment of premiums and claims, a typical example is in the illustration below: In the motor vehicle industry, insurance companies are numerous with various policies for motor vehicle insurance. In Europe, it is obvious that, an 18 year old female driver will have to cough up a little extra £4,000 in the amount of insurance premiums as she turns 27 years, as the ruling dictates. In contrast, male drivers would gain from this an estimated amount £3,050 over the similar amount of time. In the worst case scenario, still in reference to the EU Court ruling, a woman’s driver cumulative insurance expenses between the age of 18 and 27 could rise by amounts as high as £9,000. This in turn, has an adverse effect on pension annuities where the men would lose out while the women would be at an advantage (Wagner, 2010). The EU’s European Court of Justice ruling on using sex to differentiate between female and male insurance policies, it is in direct violation of the European Union rule on human rights. The Lisbon Treaty, Article 6 dictates that the EU rule shall respect the fundamental rights, as specified in detail by the European convention that protects human rights, as well as fundamental rights of both male and female individuals. The Lisbon treaty gave the charter of fundamental rights full legal effect in December 2009 for the first time. As noted that the ECJ has begun to acquire jurisdiction over matters that normally would be referred to as, not for Luxembourg but rather for Strasbourg. Controversial cases keep on coming while the concept of human pushes to new limits that are against the norm. The risk remains that, in the rise of this growing confusion and interference, all perspective disappears on what constitutes fundamental human rights, which in essence is a tremendously enormous issue. Conclusion In reference to the case scenario above, a woman cannot be charged lesser premiums than they would charge a man, the risk is similar should they charge the man less. Insurers predictably increase in amount women’s premiums instead of reducing the men’s. With this approach, an insurer was jovial in accepting a premium for women drivers, and they now have the same details as the men, men’s insurance premiums should reduce. A question remains pending; the risk for women drivers has not increased, and it does not justify the increase in their premiums. Apparently the increase for the women’s premiums is as a result of the men making all the claims. With men still being dangerous drives and women are paying the price, even as we bargain for gender equality, a lot of questions and issues are pending. The overwhelming mathematics of insurers pushing for unisex premiums and claims, the insurance entities, has been doing nothing to bring glory to their name. References Felipe, T., 2010. ECJ finally paves the way for unisex premiums and benefits in insurance and related financial service contracts. Available at: http://www.germanlawjournal.com/pdfs/Vol13-No1/PDF_Vol_13_No_01_105-123_Developments_Temming.pdf Wagner, A. 2010. Is European court gender insurance ruling completely bonkers? Available at: http://www.guardian.co.uk/law/2011/mar/01/ecj-insurance-ruling-gender-bonkers Steptoe and Johnson, 2009.Implementation of the Gender Equality Directive into French insurance law. Available at: http://www.steptoe.com/assets/attachments/3371.pdf Eassie, L., 2011. INSURANCE CONTRACT LAW. Available at: http://www.aida.org.uk/News/scopingpaper.pdf Athearn, J. L. 2007. Risk and insurance. West Pub. Co., 2009, Hansell, D. 1996. Introduction to insurance. LLP. Diacon, S. & Carter, G., 2009. Success in insurance rd Ed. john Murray. London: Hodder Education. Birds, J. 2009. Insurance Law. London: Sweet & Maxwell. Case C-236/09 Association belge des Consummateurs Test-Achats ASBL and Others v Conseil des ministres 1 March 2011. A copy of the judgement available at: http://curia.europa.eu/jurisp/cgi-bin Insurance law, 2008. Available at: http://www.oakadvocates.co.ke/userfiles/INSURANCE_LAW%20for%20DPSM%207%281%29.pdf Read More