The document discusses the Test-Achats case, which centered on Directive 2004/113/EC regarding sex discrimination in insurance. Article 5(1) banned sex as a risk factor, while Article 5(2) permitted some differences. The Advocate General argued Article 5(2) infringed on non-discrimination law. The Court ruled Article 5(2) invalid due to its lack of temporal limitation, finding men and women in comparable situations. However, critics argue the Court failed to adequately justify this finding and ignored whether differences could be objectively justified. The ruling ended the use of sex as a risk factor but its full effects remain unclear.

1. The Law Prior to the Decision
At the core of the Test-Achats1 proceedings was Council Directive 2004/113/EC.2 This essay
will consider how the Advocate General and European Court of Justice (ECJ) interpreted the
Directive’s provisions and other law prior to the decision, and the impact the ruling has had.
Article 5(1) of Directive 2004/113/EC prohibited differences in ‘premiums and benefits’ of
individuals, in private insurance and annuity contracts entered into after 21 December 2007,
where sex had been used as an indicator of risk in the calculation.
Article 5(2) permitted ‘proportionate’ differences in the provision of such services where sex
constituted a ‘determining’ factor in formulating individual insurance policies. Such
assessment was to be based on relevant, accurate, regularly updated and publicly available
data. All Member States had elected to exercise this derogation within the deadline of 21
December 2007, and were compelled to review their decisions 5 years later; taking into
account the findings of a Commission report reviewing practices in relation to Article 5,
which was due to be published in the interim.
Major uncertainty surrounded the precise relationship of these provisions given that they
appeared, prima facie, inconsistent on their position on sex discrimination. Indeed, numerous
commentators, including Di Torella heavily criticised the Directive for its ‘ambiguous
compromise’ between sex equality and the business interests of underwriters.3
On the one hand, Article 5(1) reflected a firm foundational commitment within the European
Union to promote equal treatment between the sexes. Instrumental in securing this central
aim has been the European Charter, which possesses equivalent legal status to EU Treaties,
and entrenches the fundamental rights of citizens. Particularly significant to this goal are
Articles 21 and 23 of the Charter, which respectively ban discrimination on the grounds of
sex, and require that equality between men and women is assured in all areas.
On the other hand, underlying Article 5(2) was recognition that, prior to Test-Achats, gender
was a widespread and well-established feature in firms determining the supply of insurance
products, and often led to different prices in providing cover to men and women.4 This
stemmed from statistical evidence which demonstrated varying levels of risk between the
sexes. For instance, data revealed that young female drivers were less likely than their male
counterparts to be involved in accidents; this was reflected by women paying lower
premiums for vehicle insurance.
1 CaseC-236/09, Association Belgedes Consommateurs Test-Achats ASBL and Others v Conseil des Ministres
[2011] ECR I-00773
2 Council Directive2004/113/EC of 13 December 2004 implementing the principleof equal treatment between
men and women in the access to and supply of goods and services [2004] OJL 373/37
3 Eugenia Caracciolo di Torella,‘Gender equality after Test Achats’ [2012] 13(1) ERA Forum 59,61
4 Yves Thierry and CarolineVan Schoubroeck, ‘Fairness and Equality in InsuranceClassification’(2006) 31 The
Geneva Papers 190, 193

2. Previous case law such as Neath had denied the use of sex as an actuarial factor with regard
to related matter of occupational pensions, and it was questioned whether private insurance
contracts would follow suit.5
Further uncertainty related to whether the proportionate differences proposed by Article 5(2)
could be legitimised in line with settled case law of the European Union in Arcelor.6 This sets
out the general principles for applying equal treatment, which require that ‘comparable
situations must not be treated differently’ and ‘different situations must not be treated in the
same way’, unless it can be objectively justified. Ambiguity persisted regarding whether or
not the exact circumstances between the sexes in relation to private insurance provision were
comparable, and if so whether the different treatment in Article 5(2) could be validated.
The Test-Achats proceedings dealt with the substance of the Directive with regards to
insurance for the first time, and so presented an excellent opportunity for the Court to
authoritatively resolve these issues.
Facts of the Case
Directive 2004/113/EC was transposed into Belgian Law by the Law of 21st December 2007,
amending the provisions of the Law of 10th May 2007. This allowed the Article 5(2)
deviation to remain in force after the 2007 deadline, but limited its application to life
assurance contracts only.
In June 2008, an action for annulment was brought before the Belgian Constitutional Court
by two private individuals and Association Belge des Consommateurs Test-Achats ASBL, a
non-profit consumer protection organisation. The applicants claimed that the domestic
legislation, in permitting sex specific differences in private insurance contracts, violated the
intrinsic principle of sex equality contained within the Belgian Constitution and Community
law, and thus was unlawful.
It was deemed necessary by the Belgian Constitutional Court to refer the issue to the ECJ;
especially as the former constituted a court of last resort, thus no judicial remedy would be
available to the parties under national law once it made its final decision.
The ECJ was requested to provide a preliminary ruling on whether the derogation in Article
5(2) was incompatible with the overarching principle of sex equality; and, if this was the
case, whether restricting its application to life assurance contracts would render it consistent.
Opinion of the Advocate General
In delivering her opinion to the Court, Advocate General Juliane Kokott conveyed that
Article 5(2) infringed higher-ranking Union law. Kokott’s reasoning reaffirmed that
safeguarding fundamental freedoms was key, however, she did not grant the Council a
‘boundless discretion’ to further this goal. Instead, she insisted that any legislation must
withstand examination against enshrined EU law on non-discrimination and would be
5 CaseC-152/91, D. Neath v H. Steeper Ltd [1993] ECR I-6335
6 CaseC-127/07, Arcelor Atlantique et Lorraineand Others [2008] ECR I-9895

3. improper if it undermined the Directive’s objective through arbitrary exceptions.7
Notwithstanding, Kokott recognised that under Arcelor, Article 5(2) would be suitable if a
‘legally significant’ disparity in insurance risks could be ascertained; gauged in light of the
Directive’s subject matter and purpose, and the principles and objectives of the insurance
field.8
Kokott emphasised that it was only logical that the use of sex as a factor was banned in
principle, as it would be equally inappropriate to differentiate insurance premiums on another
genetically determined factor, such as race. Furthermore, Kokott suggested that sex no longer
formed a clear risk indicator in light of societal developments, such as men and women
engaging in similar occupation and activities.9 Instead she accepted the claimants’ submission
that greater importance be placed on stronger indicators of risk, such as socio-economic
factors and habits. Despite acknowledging the complexities surrounding individual prognoses
of risk and the dangers of rising premiums; Kokott rejected using sex as a ‘distinguishing
criterion’, arguing that it could not justify circumventing indispensable EU law regardless of
its convenience.10
Thus Kokott proclaimed Article 5(2) invalid in isolation, as it was not ‘inextricably linked’
with the rest of the directive.11 Additionally, Kokott proposed that the ruling be denied
retroactive effect for reasons of legal certainty, and that a three year transitional period be
implemented following the Court’s judgment, to allow preparation for the large adjustments
to the legal framework needed. The Advocate General also argued that nothing distinguished
life insurance contracts from other insurance types, thus Article 5(2) could not be restricted to
those services.
Ruling of the European Court
The Court kept ‘good company’ with the Advocate General by declaring Article 5(2) invalid,
but employed different reasoning to reach its conclusion.12 The Court restated the cardinal
nature of non-discrimination and acknowledged that the Council, in implementing legislation
to pursue sex equality, had to give due regard to the socio-economic conditions throughout
the Union.
The Court declared that the Council was entitled to take advantage of transitional periods and
derogations of limited scope, provided this did not detract from providing a ‘coherent
contribution’ to the aim of sex equality.13 The ECJ’s judgment made it clear, in response to
the long-standing and extensive use of sex as a risk factor, that the Council was permitted to
use ‘gradual’ and ‘appropriate’ transitional periods to help achieve the goal of unisex rates.14
7 CaseC-236/09, Association Belgedes Consommateurs Test-Achats ASBL and Others v Conseil des Ministres
[2011] ECR I-00773,Opinion of AG Kokott, para 48
8 Ibid.42
9 Ibid.63
10 Ibid.66
11 Ibid.71
12 Ibid.70
13 n(1) 21
14 Ibid.23

4. The Court construed this as imperative in preventing a sudden readjustment of the market,
which the Directive’s Recitals had warned against. The ECJ contended, however, that despite
the fact that a review period had been set for 21 December 2012, it was unclear as to when
the derogation would be completely phased out, if Member States had chosen at that point to
keep on utilising it. The Court ruled that Article 5(2)’s lack of ‘temporal limitation’ meant the
exemption could persist indefinitely, and therefore was not of the restrictive nature that the
Council was limited to use.15
Irrespective of the Council’s doubts about comparing the levels of male and female insurance
risk, the Court nevertheless held that they were equal situations. In assessing its established
jurisprudence, namely Arcelor, the Court asserted that it was vital for such comparison to be
made in light of the subject matter and purpose of the measure.16
The Court did not dispute that the salient purpose of Directive 2004/113/EC was to promote
equality through the application of unisex premiums and benefits in private insurance and
annuity contracts, as articulated in Article 5(1). Thus the Court pronounced that the situation
between the sexes must be regarded as comparable. Moreover, the ECJ stated that Article
5(2), as an ‘exemption’, acted contrary to this aim and in light of the silence as to when it
would be terminated did so excessively.17 Therefore, it could not be used to objectively
justify different treatment. In this way the Court held that Article 5(2) was invalid with effect
from 21st December 2012, without retroactive effect.18 In issuing this ruling the court
considered it unnecessary to address the second question in respect of restricting its use to life
insurance contracts.
Analysis and commentary
It may be argued that the Advocate General’s emphasis that underwriters have greater
recourse to socio-economic factors in portraying risk is a fairer approach, as it grounds
policies in factors which individuals exercise a natural degree of control over, unlike sex.
Nonetheless, supplying meaningful criteria for calculating risk from many fluctuating
variables provides challenges. Additionally, for this system to operate effectively, it is
necessary that data collection methods are reliable but not deemed too intrusive, which may
be a difficult task. In this respect, the extent to which Kokott’s proposal can adequately
replace gender in indicating risk is questionable.
The Court’s brief judgment may be characterised by its failure to sufficiently engage with
why it believed that the situation of men and women in insurance was comparable. Rather
than evaluating the situations’ own merits, the court employed weak ‘circular reasoning’ by
relying on the Directive’s stated purpose of enacting equal treatment to support its
15 Ibid.26
16 Ibid.29
17 Ibid.30
18 Ibid.34

5. conclusion.19 Moreover, the fact that the original legislators vocally protested this deduction,
further calls into question the Court’s logic.
The ECJ’s avoidance of any real discussion of whether differences in treatment could be
legitimised, especially ignoring the life insurance question, is striking given the wealth of
actuarial science at its potential disposal. Indeed, the Court’s ruling has been attacked for
being tantamount to unwarranted judicial activism, by commentators such as Jakob
Cornides.20
As Alexander Goodenough claims, Article 5(2) covers scenarios described in Arcelor, where
circumstances are not factually equivalent, and so uniform treatment would be
unreasonable.21 Arguably this is a preferable understanding, as it explains why no timeframe
was attached to Article 5(2), with the two provisions operating in conjunction with one
another indefinitely. Furthermore, fears of Article 5(2) being abused are diminished by the
stringent constraints placed upon it.
Despite these drawbacks, it may be noted that denying retroactive effect was sensible in
keeping the floodgates of potential litigation closed. Furthermore, the transitional period was
crucial given the large scale changes needed; although it remains to be seen whether the
suggested duration was sensitive enough to this.
It must be remembered that the Test-Achats decision is relatively recent, therefore the full
ramifications of banning sex as a determining risk factor may not yet be apparent. To date,
the main implication appears to be the additional costs that firms have incurred and the
detrimental effect on the consumer. Disappointment has been expressed within the industry
with regard to the extra costs associated with altering practices to comply with the judgement,
and the need to hold capital in reserve to cover potential exposure to greater risk.22
Subsequently these costs are being passed on to the consumer, who now faces higher
premiums and lower benefits, particularly with regard to compulsory motor insurance.
There is also the potential for low risk consumers being unwilling to subsidise higher risk
individuals. This adverse selection process is of concern if it deters people from purchasing
private life insurance or pension plans, as the financial needs of those without cover will
place further demands on an already over-burdened state. Furthermore, bearing the economic
burden of another’s risk behaviour increases the affordability of plans to those who
statistically were higher risks. One may therefore question that by enabling easier access to
premiums to higher risk individuals the court was morally irresponsible.
The fundamental legal change produced by introducing unisex insurance pricing, has
importantly been subject to several notable limitations. It must be stressed that data on gender
19 Alexander Goodenough, ‘Test-Achats: Why the European Court of Justiceshould rethink its principleof
equal treatment jurisprudencein the context of sex discrimination’(George Mason University School of Law)
<http://works.bepress.com/alexander_goodenough/1> accessed 26 March 2015
20 Jakob Cornides,‘Three CaseStudies on “Anti-Discrimination’’(2012) 23(2) The European Journal of
International LawVol. 23 517, 533
21 n(19) 18
22 Eugenia Caracciolo di Torella,‘No Sex Please: We’re Insurers’(2013) 38 European Law Review 638-654

6. can still be collected and used at the aggregate level to assess groups’ overall risks, but it
cannot produce differences in individual rates. Moreover, the Commission’s non-binding
guidelines have re-asserted that only ‘new contracts’ within the definition provided are
affected by the ruling; and that the judgment does not affect occupational pension schemes,
which are covered by the provisions of a separate EU measure (Directive 2006/54/EC).
Ultimately, the Court’s judgment in Test-Achats did not give due care to the ‘delicate
relationship’ underlying insurance and equality through its brief and weak reasoning.23
Instead of resolving the inherent uncertainties prior to the decision, the Court and Advocate
General have been criticised for causing more confusion by misinterpreting the Directive’s
provisions, and even of illegitimate activism. The invalidation of Article 5(2) has had a
momentous impact on the law, by ending the use of sex as a variable to differentiate private
insurance rates; however it must be noted that its reach could have been far more extensive if
this factor was banned outright, immediately and with retroactive effect. Whilst the full
extent of the implications is not fully known, it appears that consumer premiums and benefits
have been adversely affected.
23 n(3) 60