A free society uses the pricing system to send signals between people who do not know each other personally. A society without a pricing system is like an organism with malfunctioning nervous system. Every attempt to tamper with the nervous system of a society will weaken some social activity.
The European Court of Justice has recently ruled that insurers will not be allowed to use gender as a factor in pricing risk. This ruling is based on an European principle that “equality between women and men must be ensured in all areas”. The ruling violates the freedom of individuals to set the terms of contracts between them and as such is unjust.
Because the ruling also distorts the spontaneously emerged pricing system in the market for risks, it will have detrimental effects to the quality and quantity of risk management performed in the society.
People using services of insurance companies should on average expect slightly deteriorating service or increasing costs of insurance. The best way to respond is to review your risky activities, like driving or traveling, and check if it makes sense to do more of less of them as the cost of insurance changes. For example young inexperienced male drivers, especially under 18, might want to drive more and young inexperienced female drivers might want to drive less.
People working for insurance companies should expect reduced enjoyment from work as some natural and spontaneous activities are replaced with directives. Their organizations are a part of the society’s nervous system and they will be weakened. Employees should take extra care for their organisations and not let them catch some other virus in the process. The way to do this is to be extra careful when starting new projects and making other changes.
Insurance consultants should charge more. The way to do it is to scare insurers about the Directive and then to offer new services to review compliance.
People interested in why this is happening should read John Galt’s speech.
Everyone else should watch out for more inexperienced male drivers under 18 when crossing the streets.
