The Mail Online reported that on 1st March 2011 the European Court of Justice ruled that differential pricing on grounds of gender by insurance companies was unlawful. From December 21 2012 insurance companies will have to charge the same motor insurance premium for women as they do for men. This will mean higher premiums for women and lower premiums for men.
The price differential has always been justified on the basis that women drivers make fewer and smaller claims on their insurance policy. We can see this as an aspect of market segmentation which involves dividing up the market into distinct segments and then developing a marketing mix for each segment. In this case, the different segments were charged different prices. The ECJ ruling will mean that insurance companies will no longer be able to segment on grounds of gender and to charge differential prices for men and women.
For students of Business this case raises a number of important issues:
· It represents a constraint on the segmentation strategies of businesses.
· It illustrates the supremacy of EU law in matters covered by the EU treaties.
· It raises major problems for business organisations such as Sheila’s Wheels which have prospered by targeting the female population.
· It raises questions about the legality of other forms of differential pricing on grounds of gender e.g. entry to nightclubs.
· And it raises the question of what constitutes fairness in pricing.
