Euro-nonsense will cost insurance customers dear

Latest article by John Blundell in The Scotsman: MY BID for immortality, apart from my two sons, consists of Blundell's Law.

This can be expressed in several ways. "Stupidity has its own entropy" is the posh version. The plain man’s rendering is "All bureaucratic interventions achieve the opposite of what is intended". It can also be distilled to "All politicians destroy their own projects".

I have just stumbled upon a proposal so ludicrous that I can only take pleasure in putting in the boot. The innovation comes from the European Commission. You may think it a wee bit technical and tedious but there is comedy if you are patient.

"The Impact Directive implementing the principle of equal treatment between women and men in the access and supply of goods and services" sounds mildly virtuous, even blameless. Yet it is a heavy-handed imposition of falsehoods. It requires that insurance companies do not differentiate between men and women, whether it be for motor insurance or pensions.

Equal treatment of the sexes sounds benign. Yet the sexes are different. Suppressing these facts helps nobody.

Women drivers crash their cars far less than men. This is not just true in Scotland. It is true in Portugal and Finland and Greece.

My guess is it’ll be true in the ten new nations joining the EU too. I’m not sure what the explanation is. It may simply be testosterone. So, women deserve lower insurance premiums as they are a far smaller risk - yet this is what the EU Commission wants to censor.

The whole purpose of insurance markets is to share or pool risks. It is no secret that smokers expire long before those who do not block their lungs. The Commission is confused about whether this raw fact ought to be banned too. There is a strong anti-smoking lobby within the Commission which favours punishing or alarming the cigarette addicts.

Had these daft bureaucrats been around in the 17th century London coffee house Lloyd’s (which later evolved into the global insurance market) they would no doubt have insisted that all merchant ships paid the same premiums, regardless of the risks.

The nature of the risk is utterly different. Markets do their job by differentiating. They digest and process past experiences to price future risks.

Penalising safe younger women drivers to cross subsidise crash-prone males is distilled foolishness yet it masquerades as enlightened policy as it does away with sexual discrimination.

If muddling motor insurance is about a vivid but essentially modest amount of money, this is only a foretaste of the vast fatuities proposed by the Commission.

Across the EU, state pension schemes are failing. They are not funded, one generation simply taxes the next to pay for their needs. As the demographic patterns confirm, ever fewer workers of the future will be levied ever greater sums to pay for retirement benefits. Britain is something of an exception. Most of our pension provisions are in the market and fuelled by actuarial risk. The bulk of pension obligations on the Continent are claims on the national treasuries.

Yes, I know this sounds academic, but there is a potential catastrophe in insisting insurers and pension funds must disregard questions of sex, or smoking, or health, or of other lifestyle factors.

The European Commission thinks it is promoting "fairness". If women live longer, this fact of nature must be ignored so men are equal. It seems plain that these rules will only impose the flaws of the state social security or pension systems into the private markets.

We were told we were joining the Common Market. What we have is the Common Bureaucracy.

Edinburgh’s insurance giants seem to be mute about this problem. Perhaps they are only being discreet. Privately, they may be