BRUSSELS—The European Union's highest court on Tuesday barred the insurance industry from charging different rates for men and women, saying the widespread practices amounts to sex discrimination against millions.

The ruling ordered changes effective Dec. 21, 2012, to auto insurance, life insurance, medical coverage and other plans, potentially affecting tens of millions of customers across the continent. For example, many women driver would see their car insurance costs rise even though they are considered safer on the road.

Insurers grudgingly accepted the ruling, but say their current policies are statistically fair and the change will be bad for customers because it will force cost hikes across the board.

"The judgment ignores the fact that taking a person's gender into account, where relevant to the risk, enables men and women alike to get a more accurate price for their insurance," said Maggie Craig, the acting Director General of the Association of British Insurers.

The EU had already imposed an equal treatment system in 2007 but left the possibility for some unlimited transitional period. Tuesday's ruling closes that loophole.

Currently millions of insurance policies take gender into account, with insurance companies arguing it is typically easy to check and is statistically sound. The court said that is inappropriate, since there are myriad other factors that could also be considered.

"Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination," the court said in a statement.

The Belgian consumer group Test-Achats, which brought the case, said the decision is a "historic ruling."

"The equal treatment of men and women must be absolute," the group said in a statement.

Even if women are considered safer drivers, the question remains whether a man should be punished by paying more despite taking special care to drive safely. Test-Achats says there are other ways insurance companies can make a distinction, for example, by taking the accident history of a driver more into account.

Test-Achats also questioned why a woman who smokes and lives more dangerously should be assessed for medical or life insurance by the standards of an average woman while a man who works out, eats healthily and does not smoke cannot see his lifestyle taken into account.

"You have to complement the statistical approach but one which is more respectful of the rights of each individual taking lifestyle into account," the group said.

It was not immediately clear exactly how insurance prices would be affected, but the British think tank Open Europe said British insurance providers alone will need an extra 936 million pounds ($1.52 billion) under the new circumstances.

It said that on average a 17-year-old female in Britain would have to pay 4,300 pounds ($7,000) more in car insurance over 10 years while a male would save 3,250 pounds ($5,300) over the same period.

Philip Jarvis, head of insurance at the international law firm Allen & Overy, said it was tough to put financial figures on the change, but that it was clearly a major ruling.

"It is nontrivial, it is a significant change to the industry," he said in an interview.

He expects overall charges to rise. Since the gender analysis is out, insurers have to spend more money figuring out pricing. Insurers could push up charges across the board to protect themselves or fine tune other, more expensive ways to differentiate between people, he said.

"The chances of this change leading to lower premiums for more people is relatively low," he said.

The British Conservatives called the ruling outrageous.

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"It is a statistical reality that young men have more accidents than women so it should be reflected in their premiums," said European Parliament member Sajjad Karim.

Kevin Clinton, head of road safety at the Royal Society for the Prevention of Accidents, saw a possible positive consequence of the ruling. "If insurance premiums for young male drivers fall, this might encourage those who currently drive uninsured to take out insurance, which would be a good thing," Clinton said.

"On the flip side, some young female drivers might be discouraged from insuring their vehicles if the cost of their premiums rises significantly."