The European Court of Justice (ECJ) has ruled that insurance companies can no longer set different premiums for men and women.
It means that women can no longer be offered cheaper car insurance rates and annuity payouts will change.
The ECJ announced today: “Taking the gender of the insured individual in to account as a risk factor in insurance constitutes discrimination.”
The new law will come in to force across Europe on 12 December 2012, giving governments and insurance companies time to adjust.
Insurance premiums were brought to the attention of the ECJ by Belgian consumer group Test-Achats.
They had challenged the current exemptions for insurers, arguing that the current law contradicted the wider European principle of gender equality.
Women are currently seen as a lower risk than men by car insurers. The British Insurance Broker’s Association (BIBA) told the BBC that the average claims for 18-year-old men and women are £4,400 and £2,700 respectively.
Spokesperson Graeme Trudgill explained: “The ruling will have a significant effect on the insurance industry which has used the system of risk based pricing to award discounts to lower risk drivers like young females who are statistically safer drivers.
“The industry will have to change its model and effectively females will now pay a cross subsidy for men on their insurance premiums.”
Women will now face significantly high car insurance prices.
A spokesperson for female-focused car insurers Sheilas’ Wheels confirmed it will comply with the new ruling but doed not intend on changing its branding or ‘pink’ image.
Adrian Webb, head of Communications, said: “Sheilas’ Wheels has always insured men but most males simply aren’t attracted to our brand and we don’t see this changing.
“We brought car insurance up to date by including benefits designed with women in mind that were absent in the market. We will continue to market to women and to celebrate our pink brand because it does not prevent female-focused marketing.”
Pension annuity rates will also be affected, as women’s longer life expectency means they receive a smaller annual payout from the same pot.
Men’s annuity rates will now suffer as they are brought in to line with women’s.