Europe's top court last week banned insurance companies from basing prices on gender, ruling that making men pay more than women for life and car accident policies is discriminatory.
The European Court of Justice ruled that insurance companies must stop charging different rates for women and men from December 21, 2012, a decision which the industry said would drive up costs for consumers.
"Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination," the court said.
The insurance sector had been given an exemption from an EU gender equality directive that took effect in 2007, allowing the industry to use statistics such as car accidents and life expectancy between men and women to set prices.
Women in general pay less for car and life insurance because they are believed to be involved in fewer accidents and live longer than men.
The Belgian consumer rights group Test-Achats, which brought the case to court, hailed the decision as a "historic ruling" and a "victory for consumers, men and women, across the European Union."
EU justice commissioner Viviane Reding welcomed the ruling as "an important step towards putting the fundamental right of gender equality into practice," and said she would convene a meeting with insurers in the coming months to discuss its implications.
"A modern insurance company should not distinguish between women and men," she said.
"All customers should be treated equally. This is not only a matter of respect for fundamental righs. It is also a matter of good business practice," said Reding, who has championed gender equality in boardrooms.
But Sajjad Karim, a British Conservative member of the European Parliament, decried the ruling as "utter madness" and 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 (insurance) premiums," Karim said.
"This is a victory for boy-racers and a major blow for both democracy and careful women drivers," he said.
The European insurance and reinsurance federation, the CEA, said the ruling was "bad news for insurance customers."
The Association of British Insurers warned it could lead to an increase in premiums paid by women and a drop in retirement annuities paid to men.
In Britain, the premium paid by women under the age of 25 for car insurance could rise by an average 25 percent, the association said.
The life insurance paid by women could rise as much as 20 percent while men could pay 10 percent less, the group said.
Men, who often receive higher pension annuities because males typically have fewer years in retirement, could see their annuity rates drop by eight percent while they would rise six percent for women approaching retirement age.
Open Europe, a think tank, said the ruling could force the British insurance industry to raise an extra £936 million (1.1 billion euros, $1.6 billion) in capital to cover themselves against the new uncertainties created in the market.