Insurance costs must no longer be based on gender, an EU court ruled today, meaning that insurance premiums costs for women drivers may rise and male pensions decrease.

“Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination,” the European Court of Justice (ECJ) said.

From December 21, 2012, insurers must adopt a “unisex” approach to setting premiums.

What the new gender ruling means for you

Car insurance

Women currently pay up less than men for insurance because they are statistically less likely to be involved in accidents. This will end.

Young female drivers will be the hardest hit and could see their insurance premium rise by up to 50 per cent once the unisex rates are applied.

Currently, the average 18 year-old male car insurance costs £4,400 compared to the average 18-year-old female’s £2,700.

The British Insurance Brokers’ Association said it was unlikely that the gender ruling would lead to a decrease in insurance costs for men, as they are still a significant risk, reports the Financial Times.

Retirement annuity

Men currently get higher annuities from their pension savings than women to take account of their lower average life expectancy.

The new gender ruling will mean that men’s pension income through an annuity could drop as much as 8 per cent from December 2012.

Women, however, could see their annuity rates rise by 6 per cent.

Life Insurance

Women generally pay less for life cover than men as they live longer.

With the new gender ruling, women could see a rise of 20 per cent in the cost of cover, while men could see a fall of 10 per cent, the FT reports.

What the insurance industry says

The ECJ’s decision has been slammed by insurance industry insiders, who said differential pricing for men and women was legitimate given their different risk profiles.

“Europe-wide the effect on the price and benefits and on the choice of insurance products for consumers could be significant,” the CEA, Europe’s insurance industry lobby, said.