Risk Classification Efficiency and the Insurance Market Regulation

Given that the insurance market is characterized by asymmetric information, its efficiency has traditionally been based to a large extent on risk classification. In certain regulations, however, we can find restrictions on these differentiations, primarily the ban on those considered to be “discriminatory”. In 2011, following the European Union Directive 2004/113/EC, the European Court of Justice concluded that any gender-based discrimination was prohibited, meaning that gender equality in the European Union had to be ensured from 21 December 2012. Another restriction was imposed by EU and national competition regulation on the exchange of information considered as anti-competitive behavior. This paper aims to contribute to the recent policy debate in the EU, evaluating the negative economic consequences of these regulatory restrictions in terms of market efficiency.