The SIA is in favour of efforts to promote sexual equality and is against state-imposed unisex premiums

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Ladies and gentlemen

The discussion on how to achieve equality between men and women in Switzerland has been rekindled by the non-inclusion of Ruth Metzler in the Federal Council and the publication of the latest wage statistics. A women's manifesto has been launched to tackle the differences that continue to exist. In parallel, a debate sparked by events in the EU has emerged over introducing insurance premiums that do not differentiate between gender. In Switzerland, the Swiss National Council has still to review a parliamentary initiative aimed at eliminating the different premium rates in voluntary health insurance. The Swiss Insurance Association and its member companies fully support the vigorous efforts to make equality a constitutional right, but reject any sort of legally prescribed unisex premiums, as they infringe upon the principle of risk-based premiums and freedom of contract.
 

Genuine equality, with no ifs or buts

The Swiss insurance industry fully backs the principle of sexual equality and undertakes every effort to observe this principle in its business practice. A growing number of companies have appointed an equality adviser responsible for advising top management on measures to promote equality and ensuring their implementation. Examples such as flexible working hours for parents, company crèches, maternity leave, part-time management positions or teleworking, have already become reality in many companies. The number of women reaching middle management positions has risen consistently and is now approximately 20%. But there is a lot of catching up to be done at senior management and executive level. This will require more concerted effort.

EU Commission's attitude to equality is out of touch

As part of measures to improve equality outside of the workplace, EU Commissioner Anna Diamantopoulou wants to introduce an EU directive prohibiting different premium rates for men and women. Both sexes should be treated equally in all areas of insurance (life and non-life). Ireland, the current holder of the EU Presidency, wants to push through the directive this year. Various EU governments have spoken out against the proposed directive, for example, Germany, Greece and the UK.

Unisex premiums also an issue in Switzerland

Unisex premiums have also become an issue in Switzerland, sparked not only by media reports about the EU plans, but also as a result of a parliamentary initiative by National Councillor Franziska Teuscher dating back to 1998, which aims to eliminate different premium rates for men and women in voluntary health insurance. She believes that the higher premium rates for women are due in particular to costs for pregnancy and birth. The National Council narrowly voted in favour of the initiative in autumn 1999 with 78 votes to 77, which shows a relatively high level of acceptance for the idea. A draft of the bill is now pending. The preparatory committee recently voted by 12 votes to 10 to have the proposal shelved. The full Council has yet to reach its decision. If the proposal to shelve the plans fails to obtain a majority, something which cannot be ruled out given the re-emergence of the discussion on equality, we have to accept that we may later be faced with the spread of unisex premiums to other areas of insurance.

Unisex premiums are discriminatory

Compelling insurers to implement unisex rates would result in discrimination and inequality between males and females, as women would be forced to pay higher premiums for term life insurance despite their longer life expectancy – statistics show that they live up to five years longer than their male counterparts.

In Austria, the proposed EU directive for premiums not based on gender would mean that women, for example, would have to shoulder an additional 347 million euros of the total annual premium income in new business.

No legal basis for measures

Article 8, Paragraph 3, of the Swiss Constitution states that "men and women have equal rights in law". Pursuant to this statement, differentiation between males and females is only permitted if it is based on fact, ie objective criteria, rather than gender-related considerations.

In private insurance, charging the same premium or offering the same benefits is fair (and commensurate with the risk) if based on the statistical evaluation of a homogenous community of insureds. For example, we cannot charge a waterworks the same premium for a fire insurance policy as we would a carpenter's shop, just as we cannot ignore the different risk profiles that men and women have.

Premiums in Switzerland

In Switzerland, gender-specific premiums are applied in life, health and accident insurance. A handful of companies differentiate between gender for motor third party liability and motor own damage insurance. In these cases, the difference in premiums is roughly 5%. This approach is applied especially to young people under 30.

In life insurance, it is normal for men and women to be charged different rates. Depending on the line of business, the difference can be small or large. The figures I am about to cite are based on the current premium rate tables of a representative Swiss life insurer: in individual life insurance, the premiums for women in traditional endowment insurance (same pure endowment and term life insurance benefits) are up to 6.5% lower; on average they are approximately 0.5% lower. In the case of term life insurance (death benefits and disability annuities), premiums for women are up to 50% lower; on average women are charged about 30% less than their male counterparts. For old-age pensions, premiums for women are up to 10% higher; on average the figure is about 5%. Group life insurance premiums for women are up to a maximum of 75% lower in term life insurance. On average they are roughly 50% lower.

Different premium rates for men and women are also to be found in individual accident insurance, in daily sickness benefit insurance and in individual voluntary health insurance, although they are not commonplace. Women pay up to 30% more for daily sickness benefit insurance. In individual accident insurance, rates for women are on average 20% lower. A general statement on the extent of premium differences in individual voluntary health insurance is not possible on account of the wide variety of products on offer. Rates depend on the company, insurance product and the age of the insured.

Competition and freedom of choice

Any type of premium equality imposed by the state will cause discrimination against persons that represent a higher risk. Insurers would principally target insureds with a more favourable risk profile. This has already been seen with the health insurance law. State intervention in the form of a compensatory mechanism (eg risk spread in compulsory health insurance) would be needed to prevent discrimination. This would fully undermine the principle of freedom of contract, a key component of a prosperous economy. State intervention is only justified by overriding interests, which in this case do not apply. The private insurance industry must remain free to design its products as it wishes.

A well-oiled insurance market based on competition and freedom of choice is in the interests of all policyholders.

Thank you for your attention.

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