The Deputy will be aware that the Insurance Distribution Directive (Directive (EU) 2016/97), or “IDD”, establishes requirements in respect of insurance and reinsurance distribution in the EU. It aims to further enhance consumer protection and ensure a level playing field by extending the scope of the directive to include all sales of insurance products. This Directive was transposed into Irish law by the European Union (Insurance Distribution) Regulations 2018 (S.I. No. 229/2018) as amended, and Article 17(1) in the question was transposed through Regulation 30(1) of the Regulations.
With regard to the enforcement of the Directive, the Regulations designate the Central Bank of Ireland as the relevant competent authority in the State. I understand that the European Commission recently confirmed to my Department that it had no issues concerning the completeness of the national transposition measures in respect of the Directive.
With regard to the interaction between the Directive and the Central Bank’s Review on differential pricing, I understand that the purpose of the Review is to examine the extent to which the practice of differential pricing (whereby customers with similar risk and cost of service are charged different premiums, for reasons other than risk and cost of service) is consistent with the Central Bank’s Consumer Protection Code 2012 (the “Code”). The Deputy will be aware that the Code requires firms to inter alia act honestly, fairly and professionally in the best interests of their customers; and make full disclosure of all relevant material information, including all charges. In addition, it is seeking to establish the impact of differential pricing on consumers; identify the drivers of consumer behaviours including how consumers engage with the insurance industry; assess the extent to which these pricing practices lead to outcomes consistent with the Code; and assess the governance and oversight of differential pricing. The Deputy will also be aware that the Central Bank’s review is ongoing and in this regard, I believe that it would be prudent to await the outcome of the review in advance of reaching any conclusions.
In conclusion, differential pricing is undoubtedly a complex issue and will need careful consideration of any potential remedies, and what overall impact they would have on consumers. We need to guard against the risk of unintended consequences in that in attempting to address an issue we don’t create an undesirable knock-on impact elsewhere. This could include discouraging competition or new entrants to the market, all of which is not in Irish consumers long-term interests.
