Insurers angered by sex equality measures

EU proposals to ban insurers, mortgage companies and banks from pricing financial services differently for men and women were adopted yesterday, drawing protests from British insurers who predicted higher premiums.

The proposals, which were adopted by the European commission in Brussels, are designed to outlaw sexual discrimination in the provision of goods and services.

The commission argues that women are unfairly forced to pay higher premiums for pensions and annuities because they have a higher life expectancy and therefore need the money to last longer.

It believes that young men are forced to pay unfairly high premiums for car insurance.

Women are discriminated against in the field of health insurance as insurers expect them to become pregnant at some stage in their lives so charge them more.

Anna Diamantopoulou, EU social affairs commissioner and the woman behind the legislation, acknowledged that the move would be controversial. "There is always a fear of the huge impact on economies and it's always very difficult."

Under the new law, which still needs to be approved by all EU governments and discussed in the European parliament, Britain would have to set up an equality office to police the new directive.

Companies would be given until 2007 to change their pricing policies, although the insurance sector would be exempt until 2011.

The Association of British Insurers slammed the new directive yesterday, warning that premiums for women would have to go up as a result. "Commissioner Diamantopoulou has started with the best of intentions, but this piece of EU legislation will do no one any good," said Mary Francis, director general of the ABI.

"At present, we can set prices fairly on the basis of genuine risk, which benefits all our customers. These proposals would mean women would have to pay more than a fair price for motor and life insurance. Conversely, men would have to pay more for annuities."

The ABI claimed that the cost of life insurance would have to go up by up to 15%, or an average £35, a year for women. Car insurance for women under 30, currently an average £130 cheaper per year than that offered to men, would also be affected.

The government said it welcomed a fresh drive to fight discrimination but hinted it was receptive to the insurance industry's complaints, raising the prospect of an opt-out for the entire sector. "We are listening to the industry," said a spokesman."We have heard what they have to say and we need to carry out an analysis of what the impact will be."