The Association of British Insurers (ABI) has warned its members to prepare for a ban on premium price differentiation based on gender.

According to reports in UK insurance publication Post, the ABI has sent a letter to its member companies advising them to prepare for a March 1 ruling by the European Court of Justice that will outlaw differences in premiums and benefits in insurance contracts based on gender.

ABI Acting Director-General Maggie Craig wrote: “We would need to study the eventual judgement to be clearer about its exact consequences.

“However, if the court goes down the route we fear, all new contracts would have to be gender-neutral from the date of the judgement.

“The ABI cannot say with certainty this is the decision the court will take, but we are absolutely certain that member companies should be ready for such an outcome.”

In 2004 the EU implemented the Equal Treatment Directive, which included a provision that allowed insurers in EU member states to continue to use gender in risk pricing providing it was backed by published actuarial data.

But in 2010 a Belgian consumer group and two private individuals challenged the provision in the Belgian constitutional court, leading the EU to re-examine the issue.

The ABI says that if the opinion is made law, premiums for female drivers in the UK will rise by 25%. The ruling could also affect life insurance and annuities.

Ms Craig says it is unclear whether the law would apply only to insurance contracts issued after March 1 or also to existing insurance contracts.