Is Risk Differentiation on European Insurance Markets in Danger?

Abstract

The paper deals with the importance of risk differentiation on insurance markets. It is argued that a tendency towards a prohibition of risk differentiation supported by the equality principle may endanger the insurability of particular risks. However, Council Directive 2004/113/ECC implementing the principle of equal treatment between women and men in the access to and supply of goods and surfaces still provides sufficient scope for insurers to apply risk differentiation. Examples are given from traffic insurance and flooding insurance to demonstrate that also insurers themselves sometimes underestimate the importance of risk differentiation.