UNISEX – Effects on PKV contracts

New ruling by the European Court of Justice (ECJ) obliges insurers to use only so-called “unisex tariffs” from 21 December 2012, for example in comprehensive private health insurance, daily sickness allowance, daily nursing allowance and other supplementary insurance, but also the so-called premium protection plans. Up to now, men have usually paid a lower premium than women in the same tariff, because men have a shorter life expectancy and usually have lower medical costs than women up to a higher age.

End for gender-dependent premiums in private health insurance

The ECJ ruling of 01.03.2011 (Case C-236/09) obliges insurers to use unisex tariffs in private health insurance from 21.12.2012. The General Equal Treatment Act (AGG) has been in force since 18.08.2006. The AGG is based on several directives of the European Union. The ECJ has now declared an option not to use unisex tariffs in the case of statistically proven differences between men and women in Art. 5 (2) of Directive 2004/113/EC to be invalid – albeit with a transitional period until 21 December 2012.

 

Existing contracts

The legislator can regulate the implementation of the unisex tariffs in such a way that the premiums for men are also increased in contracts concluded earlier in order to finance a reduction for women in return, so that both are subsequently at the same level. An additional increase in contributions for men will then already take place on 01.01.2013 as a result of a legally introduced one-off right of adjustment.

 

Pensions for old stocks

After the introduction of unisex tariffs, many women would switch their existing insurance policies to the new unisex tariffs, which are more favourable for them – they cannot be prevented from doing so without a restriction of the right to change tariffs under § 204 VVG, which is not desired by the legislator. Then newly insured men will meet there with the newly insured women, who will already be asking for them more often than before. But there is also an immediate mass of women who are switching their existing insurance policies to the new favourable terms. The result is that a very large number of women are initially matched by only a few newly insured men. The new tariffs will then have to be calculated almost at the same level as the previous women’s tariffs, and will thus become even less attractive for men. The legislator could solve the problem by imposing the changeover to the same unisex tariffs for all insured persons, irrespective of when the contract was concluded.

 

Help from the legislator

The problem of private health insurance is therefore: women could immediately switch to the unisex tariffs, which are more favourable for them, and there they would immediately be so enriched compared to men that the premiums for new entrants would immediately have to be calculated even higher, almost to the women’s level. In order to avoid this, the PKV lobbyists have turned to the state so that it may also legally prescribe the unisex tariffs for all already insured customers. The ECJ does not require such a far-reaching alignment at all, because it would leave the contracts already in place at the end of 2012 untouched.

 

Problem solving at the expense of the insured

The German legislator, however, can also impose unisex equalisation for all existing customers nationally beyond the ECJ requirements in order to help the industry out of its signalled predicament. The supervisory authority has already given the go-ahead for this, even if this unisex conversion alone means that additional increases of up to 10 percent each – and exceptionally more – will have to be implemented for existing contracts for men as of 1 January 2013, so that all women already insured at the end of 2012 can also be reduced to more favourable unisex premiums beyond the ECJ requirement. Some insurers, especially those with strong portfolios of daily nursing allowance insurance, could also see larger increases. These increases then meet the normal premium adjustments on the same date.

 

Liability risk

Since this is being discussed seriously and very specifically as a solution in private health insurance, brokers cannot claim that they did not know about it. Those who are still brokering private health insurance tariffs now must therefore point out the additionally threatening increases in order not to be liable themselves later. A look at the contributions of women in the same tariff should illustrate the impending potential for increase.

 

Use alternatives

Instead of private health insurance, it may be worthwhile for new customers to opt for a life insurance tariff in 2012 because of the impending unisex adjustment, which, as things stand at present, cannot be adjusted for insured persons until the end of 2012. This concerns, for example, a long-term care pension insurance instead of a daily care allowance insurance or a normal pension insurance instead of a so-called premium guarantee plan for premium reduction in old age. As things stand today: because the legislator could also regulate this differently, even retroactively. Because nothing is certain, it would be a “burden-sharing” law of equal treatment, so to speak, in which policyholders bear each other’s burdens, not insurers or employers. The private health insurance industry is demonstrating how it is possible to intervene in existing contracts, commitments and “guarantees” with state help, if only one wants to, and this also applies to life insurance. Here too, therefore, there is a risk of liability for brokers.

 

 

by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm

by courtesy of

www.performance-online.de (published in Performance 01/2012, page 34-35)

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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