The European Court of Justice has ruled that using differences between men and women in setting risk premiums for car insurance, life assurance and pension schemes breaches EU rules on equality.

The ruling will signal the end to the use of gender in insurance pricing and is set to have a significant impact on the insurance industry. 

But is this just another example of the UK being ruled by Europe, or is it about time that the UK demonstrated a more consistent approach to setting insurance premiums asks Paul Brown, managing director of leading Midlands insurance broker Franklands.

"From December 2012, insurers will no longer be able to base female driver premiums on statistics that show that they have lower accident rates and costs - a decision which could increase costs for female drivers under 25 in the UK by 25%, while men could see their costs fall by 10%

"By banning risk assessment based on a person's sex because it breaches its rules on equality, the EU Court in Luxembourg has, in effect, torn up the rule book for insurance companies, which has worked quite satisfactorily for decades.

"Insurance premiums are currently determined based on up to 20 or 30 different rating factors - ranging from age, gender and occupation to the type of car you drive, where you live and the number of convictions you may have.

Until now, discrimination in setting insurance rates has been permitted under EU equal treatment rules and statistical evidence has been built to identify those high risk groups and weight their premiums accordingly. 

For example, statistics suggest that male drivers under 21 are twice as likely to have an accident than thier female counterparts, therefore their premiums are higher.

Women in general pay less for car insurance and life assurance because they are believed to be involved in fewer accidents and live longer than men, so it seems fair that this should be reflected in their premiums. 

However, the industry will now have to ignore this, which means that females will now effectively be subsidising males for their poorer record. And sadly, the changes will be forced through by Christmas 2012 without the British Parliament having the chance to raise any opposition.

This ruling flies in the face of all known statistics and leaves us once again wondering if Britain is still in control of its own affairs. 

Whilst the ruling is going to improve the situation for young men, it is going to increase premiums for lots of groups of females. Experts predict that the overall cost to UK customers of the judgment will be almost £1 billion. 

Young women drivers could be forced to pay an extra £4,300 between the ages of 17 and 26. And, in a 'worst-case scenario', women drivers' cumulative insurance costs could be as much as £9,300.

It's a similar scenario for life assurance and annuities - Women currently enjoy cheaper life assurance as they have longer life expectancies. Pension or annuity income for men is higher as well, typically, because men have fewer years in retirement on average. But these differences will be wiped out by the ruling.

In my view, this ruling has pushed anti-discrimination legislation beyond the realms of common sense and EU judges have ruled to overturn long-held national rules and increased costs for consumers in the process.

Fixing the rate of a commercial product should be based on the risk posed by each customer and the cost of providing it. Statistical evidence proves that young men are more likely to be involved in an accident - therefore, their premium will be more expensive. Judges in Luxembourg should have nothing to do with it.

If it is deemed illegal to link insurance premiums to gender, how long before the same rules are extended to age?

This saga began hundreds of miles away in Belgium, but the impact will be felt by the UK insurance indsutry for years to come. It is suggested that UK insurance providers will now have to raise an extra £936 million to cover themselves against 'new uncertainties' in the market when the equality rule changes.

At no stage did the case come anywhere near the British legal or Parliamentary system - yet every one of us must now suffer the consequences.