The European Court of Justice has announced insurers will no longer be able to use gender when setting insurance premiums.

It claims using gender as a risk evaluator is discriminatory and unlawful. 

The ruling will come into effect on 21 December 2012.

Previously the insurance industry had been able to opt out of  the European Union’s 2004 Gender Directive, but the new ruling means insurers will no longer be able to charge different prices or offer different products to men or women because of their sex. 

This is likely to inflate insurance premiums across the board as the move could cost the insurance industry close to £1 billion collectively, according to thinktank Open Europe.

'Illogical' decision

While premiums will increase for some and decrease for others, experts predict that the rises will be greater than the falls.  

Peter Chadborn, director of Plan Money, says: 'It is hugely disappointing that this illogical ruling has been upheld but I'm pleased that the industry has been given breathing space to adjust properly.'

Kevin Carr, chief executive of the Protection Review, says: 'The decision to implement the gender rule change at the end of 2012 after an initial transition period represents a victory for common sense.

'If the ruling had been immediate we could have seen significant price increases in various types of insurance products, such as motor and life, and consumers would've been hit with immediate increases in the cost of new cover. However, now the industry has time to adapt, which is welcome.'

Consumers will see changes to their motor insurance, private medical insurance, life insurance and annuities.