Recently, the BBC reported that insurance companies in Europe are no longer allowed to differentiate between male and female policyholders when calculating their premium.   The reason for this, per the ECJ, is that charging different rates for these separate segments of the population is a form of discrimination. 

This ruling has some saying that the insurance industry will be “thrown into a turmoil” since insurance companies have historically used gender as a key component in the calculation of premiums.  However, on the other side of the debate, there are those hailing it as a step towards basic gender equality.  Martin Lewis, creator of MoneySavingExpert.com believes there is logic to the gender ban, and does not believe that his rates should depend on the poor driving skills of his fellow man.

The Casualty Actuarial Society (CAS) describes some principles of a rate in its Appendix 1 of its Statement of Principles Regarding Property and Casualty Insurance Ratemaking :

• Principle 1: A rate is an estimate of the expected value of future costs. 
• Principle 2: A rate provides for all costs associated with the transfer of risk. 
• Principle 3: A rate provides for the costs associated with individual risk transfer
• Principle 4:  A rate is reasonable and not excessive, inadequate, or unfairly discriminatory if it is an actuarially sound estimate of the expected value of all costs associated with an individual risk transfer.

Do you think that the current ECJ ruling supports or violates the CAS principles above?  How do you believe that the ruling will impact insurance pricing?  Do you believe that the use of gender in premium calculations is a discriminatory act?

• The two parties, the business and the consumer, are not on equal footing, and;
• The clauses are not valid in cases where the person signing the agreement has died and the estate has pursued liability actions against a third party. 

Actuaries rely on stable legal environments when analyzing historical claim reporting and settlement patterns to produce reasonable loss reserve estimates and to price their insurance products adequately.  Invalidating these clauses may substantially disrupt the legal environment.

The uncertainty related to enforcing these contracts and the arbitration provisions weigh heavily on business.  On the other hand, injured parties need to have reasonable access to recover for damages caused by a third party.  Every year there is proposed federal legislation to limit or eliminate arbitration clauses in contracts, and many lawyers contend that consumers are being abused by these clauses. 

What do you think: Are outcomes for consumers worse under arbitration than under a traditional liability suit?  Are arbitration clauses a reasonable way to produce tort reform when other tort reform approaches like capping non-economic damages are not palatable?  Should there be more clarity for businesses to fully understand that these agreements are enforceable and are valid for living persons as well as the estates of deceased persons?  Should people have the free right to sign contracts with arbitration provisions if those same people are deemed to be on unequal footing with the party with whom the contract is signed? Let us know what you think.

What is your expectation regarding property & casualty pricing for commercial lines and personal lines?  Do you expect increases?  Decreases?  Status quo?  Let us know.