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On March 1, 2011, the European Court of Justice, the EU's Supreme Court, declared illegal the widespread practice of charging men and women different rates for insurance, setting in motion an overhaul of how life, auto and health policies are written across Europe. Although tied to commerce, the ruling involves non-economic elements as per the high court's citation of the EU's Charter of Fundamental Rights, which enumerates 14 categories on which discrimination is prohibited; sex is the first. A separate provision states that "equality between men and women must be ensured in all areas." Because fundamental rights go to the core of what a political domain stands for, at least in the case of a republic, an implication is that the EU is indeed a political federal state, rather than simply a WTO for Europe. The fact that the states of the EU must abide by the ECJ's ruling on the fundamental rights means that some governmental sovereignty has indeed shifted from the state governments (and their respective constitutions) to the EU.  Like the US, the EU is a federal system of governance characterized at its core by dual governmental sovereignty, which in turn is sourced in popular sovereignty.  Other, less fundamental, implications can also be drawn from an analysis of the ruling.

Ironically, the court's decision means that women drivers will pay higher premiums (possibly up to 25% more) to be treated equally; premiums for young men would fall. Hitherto, European insurance companies could use the statistical correlation between being male (and young) and risky driving to charge young men higher premiums.  Positive correlation is not causation, however; there is no known causal relationship between a female biology and relatively risk-averse driving. The advocate general, Juliane Kokott, argued that there was "no compelling evidence that women live longer or drive more safely because they are biologically women. Underlying factors affecting longevity or prudent driving—such as drinking habits or the desire to engage in risky behavior—might be associated statistically with one or other sex. But that, she said, doesn't mean insurers can choose a price for a particular customer based on sex," acccording to The Wall Street Journal.

Generally speaking, David Hume argued in the eighteenth century that we don't really understand causal connections even when we think we do. In other words, we tend to make assumptions--essentially over-extending our minds from what we do in fact know. I would add that presumption itself might be hardwired in the human mind even in simply being able to have a coherent (i.e., unitary) consciousness.  Unavoidably, we make assumptions about what we perceive in order for the world to make sense.

In addition to the political and philosophical implications, the case provides an illustration of the nature of business regarding regulatory obstacles. In short, it is in the nature of a profit-seeking machine to get around the dams.  The Wall Street Journal reports that European insurers "had been bracing" for the March 1 ruling. Philip Jarvis of the law firm Allen & Overy in London "says insurers may have to collect more individual data on policy holders to compensate for the loss of sex as a quick dividing line. That could accelerate, for instance, the adoption of vehicle "black boxes" or other devices to plug into onboard diagnostic computers to give insurers a direct look at driving habits." Such a closer tie between a driver's premium and his or her actual driving would be fairer than going on market-segmentation correlations (i.e., groupings).  However, to the extent that correlations are more cost-effective than equipping every car with a black box, insurers could simply find other variables that are not gender but essentially give the same results. For example, if women tend to buy a product, insurers could use owning that product in lieu of gender in pricing premiums. That would probably set off another round of legal proceedings, but it would give insurers additional time under essentially their old rubric.  In short, I contend that business is inherently oriented to getting around things in its way profit-speaking. A regulation that a firm cannot use strategically (i.e., giving it a comparative advantage over competitors less well-equipped to comply) is apt to be viewed from a managerial standpoint as a challenge to get around with the least inconvenience or cost. To be sure, there was no evidence of such behavior as of the ECJ's March 1st ruling; I am merely pointing to how it might look.

Source: http://online.wsj.com/article/SB10001424052748704506004576173832873341162.html?KEYWORDS=EU+Closes+insurers%27