The Deputy will be aware that the Programme for Government includes a commitment to work to remove dual pricing, a form of differential pricing, from the insurance market. In this regard, the Action Plan for Insurance Reform also commits to examine the forthcoming final report and recommendations of the Central Bank Review of Differential Pricing in the Motor and Home Insurance Markets and take any appropriate actions as deemed necessary, in light of the final report. The Central Bank’s Interim Report, published in December, marks an important milestone in its review of the issue and summarises the initial observations from its ongoing market analysis and consumer research. I look forward to the final report being published shortly.
I note that the Central Bank has stated that differential pricing can be associated with both benefits and costs for consumers. Accordingly, completion of the analysis will be essential in order to ensure a full market perspective, evidence-based conclusions and in turn appropriately calibrated regulatory interventions as are needed to apply to the specificities of the Irish market. In addition, the associated consumer research will also provide insights which will be essential to the Central Banks’s overall analysis.
Both Minister of State Fleming and I have repeatedly called on the industry to treat its customers fairly and in line with the Central Bank’s Consumer Protection Code. Minister of State Fleming has raised his concerns with the main insurers that dual pricing in particular may be unfair for some customers and that they be proactive in responding to the Central Bank’s interim findings. However, the Government also believes that prior to proposing solutions, it is essential that the Bank’s Review be completed, to ensure remedies are evidence-based and do not impact consumers negatively, including impacting the ability of consumers to shop around for better deals. This position is consistent with the Action Plan for Insurance Reform.
In advance of the publication of that report, my Department is proactively considering issues raised in the general debate on this, including the Private Member’s Bill proposed by Deputy Doherty in February. As part of this work, it is examining recent developments in the UK, where the Financial Conduct Authority (FCA) has announced a ban on the practice of ‘price walking’ for motor and home insurers, to come into effect next year. This is the practice where providers initially offer a lower premium to new customers, which is then increased in subsequent years on renewal. While my Department is not directly consulting the FCA on its policy statement at this time, my officials are engaging, both through our Embassy in London and directly, with the UK Treasury on this and other financial services issues of relevance. I would expect that during the course of its work, in particular following the publication of the Central Bank’s final report, it will consult all relevant stakeholders as necessary to ensure any policy solution proposed is fully considered and evidence-based.
