The decision is also set to deal a blow to male pensioners.
The European Court of Justice tore up the rule book for insurance companies by banning risk assessment based on a person’s sex.
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No more cheaper deals: An advert for Sheilas' Wheels, which is principally aimed at women, won't be able to offer cheaper car insurance to female customers after the ruling
The ‘gender equality’ ruling means young men cannot be charged more for their car insurance – even though they are ten times more likely to have a serious crash.
Experts predict women drivers aged under 26 now face a 25 per cent rise in car insurance rates – while premiums for ‘boy racers’ will be cut by 10 per cent.
At the same time, the income a man receives for life from his pension will be cut by as much as 8 per cent, or hundreds of pounds each year.
The EU court decided it is not fair for men to receive more than women each month – even though they are statistically likely to die younger.
The changes will be forced through by Christmas 2012, without the British Parliament having the chance to fight the ruling.
Experts say the overall cost to UK customers of the judgment – based on a case brought by a consumer group in Belgium – will be almost £1billion.
The judges pointed out that the Lisbon Treaty – on which the British public was denied a referendum by the Labour government – includes the Charter of Fundamental Rights.
This aims ‘in all its activities, to eliminate inequalities and promote equality between men and women’.
Conservative MEP Sajjad Karim said: ‘This ruling is utter madness. It is a setback for common sense.
‘It is a statistical reality that young men have more accidents than women so it should be reflected in their premiums.
‘Boy racers will now have even more money to buy unsafe fast cars, whilst safer drivers will be hit hard in their insurance premiums.’
Until now, discrimination in setting insurance rates has been explicitly permitted under EU equal treatment rules.
It allowed the market to fix the price of a financial product based on the statistical likelihood of a person having an accident, falling ill or dying.
All insurance products will be affected by the new ruling.
The Association of British Insurers predicted that, for annuities, men approaching retirement could face an 8 per cent cut in rates, while those for women approaching retirement would rise by 6 per cent.
A 65-year-old man with a £100,000 pension pot would be more than £8,500 worse off by the time he is 90.
Women currently receive less per year, based on the assumption they will live for longer.
For life insurance, men could see a 10 per cent fall in costs, while women’s rates could rise by as much as 20 per cent.
Anger: Conservative MEP Sajjid Karim, with David Cameron in 2007, condemned the ruling as 'utter madness' and a 'setback for common sense'
Open Europe said UK insurance providers would now have to raise an estimated extra £936million to cover themselves against ‘new uncertainties’ in the market when the equality rule changes.
It predicts young women drivers will pay, on average, an extra £4,300 between the ages of 17 and 26.
In a ‘worst-case scenario’, women drivers’ cumulative insurance costs could be as much as £9,300, the think-tank predicts.
Risks: Young men are ten times more likely to be involved in a serious crash
Stephen Booth, of Open Europe, said: ‘This ruling has pushed anti-discrimination legislation beyond the realms of all common sense. Unaccountable EU judges have ruled to overturn long-held national rules and increased costs for consumers in the process.
‘To do so in the name of equality just adds insult to injury.’
Dr Ros Altmann, director general of Saga, said: ‘The European Court has dealt a further future blow to Britain’s already struggling pensioners.
‘In defiance of common sense and logic, insurers will be barred from pricing their products on the basis of risk.’ She added: ‘Our state pension is already about the lowest in Europe so the impact here is very worrying.’
Adrian Webb, of Sheilas’ Wheels, which targets female customers, said: ‘We have always insured men but we will continue to market to women and to celebrate our pink brand because the ruling does not prevent female-focused marketing.’
James Slack's analysis
Yesterday's verdict was yet another expensive reminder of how Britain – and even the financial markets – are no longer in control of their own affairs.
The saga began hundreds of miles away in Belgium.
A little-known consumer group, Test-Achats, challenged – in the Belgian courts – the idea that insurers could use a person’s sex when assessing risk.
Belgium’s Constitutional Court decided to send the case to the EU’s lawyers for a decision.
Last September, Juliane Kokott, an advocate-general at the European Court of Justice in Luxembourg, decided there had been a breach of ‘gender equality’ rules. Now the court itself has agreed.
At no stage did the case come anywhere close to the British legal or Parliamentary system – yet every single one of us must now suffer the consequences.
In many respects, we have become depressingly acclimatised to unelected, unaccountable European judges meddling in our affairs.
The European Court of Human Rights, in Strasbourg, routinely forces us to live side-by-side with terrorists who it stops Britain from deporting.
Soon, if the court has its way, we will be sharing the ballot box with convicts.
But what is so alarming about the insurance case is that judges are not consigning themselves to legal matters. They are meddling with the markets.
Fixing the rate of a commercial product should be entirely decided by the market, based on the risk posed by each customer, and the cost of providing it. There is hard statistical evidence that young men are more likely to have a serious accident.
Therefore, their premium will be more expensive. It should have nothing to do with judges in Luxembourg.
Where will it stop? If it is deemed illegal to link insurance to gender, how long before the same rules are extended to age?
Last night, Test-Achats declared the insurance ruling a ‘victory for consumers, the men and women’ of the EU.
Rather, it was a defeat for democracy and Britain’s ability to govern its own affairs. ( dailymail.co.uk )
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