Dara Calleary
Question:73. Deputy Dara Calleary asked the Minister for Finance the measures he will be taking to address dual pricing in insurance. [44799/21]
View answerTuesday, 21 September 2021
Questions (73)
Written answers
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 publication of the Central Bank’s Final Report and Public Consultation on Differential Pricing in the Motor and Home Insurance Market in July this year – two months ahead of schedule – was a major development in this area and marks the completion of a further deliverable of the Action Plan.
The Deputy will recall that the Central Bank’s Interim Report on this matter in December last year showed that consumers who do not shop around and switch regularly can be subject to a ‘loyalty penalty’. However, the report also indicated that differential pricing can also benefit new customers or those that engage with their provider, or switch provider regularly. The Government has consistently said that it is important that we also protect the ability of consumers to get a good deal.
The Bank’s Final Report this summer showed that the majority of motor and home insurance firms apply some form of differential pricing and that some of the pricing practices identified could result in unfair outcomes for some consumers.
Accordingly, the Central Bank is proposing to use its own powers to ban a practice known as ‘price walking’ in the motor and home insurance markets for personal customers. ‘Price walking’ is where customers are charged higher premiums relative to the expected costs they incur the longer they remain with an insurance provider. In addition to a price walking ban, the Central Bank is also proposing to require insurers to review their pricing policies annually and introduce new consumer consent and disclosure requirements around automatic renewals of all personal non-life insurance products. The Central Bank currently intends on having the new rules in relation to price walking in place on 1 July 2022 and I would strongly encourage all stakeholders to respond to the Central Bank’s public consultation on this matter, which runs until 22 October.
Finally, I think it is important to note that these proposals are evidence-based and tailored to the specific circumstances in the Irish market. The Government supports them and stands ready to assist the Central Bank in any way it can to enable it to implement its proposals, if required.
Question No. 74 answered with Question No. 32.