THE INSURANCE INDUSTRY has said it will “engage constructively” with the Central Bank probe into dual-pricing.
Sinn Féin’s Pearse Doherty wrote to both the Central Bank and Competition and Consumer Protection Commission (CCPC) seeking an in-depth investigation into the issue.
Doherty had previously raised the matter with insurance industry bosses when they appeared before the Oireachtas Finance Committee recently.
The committee agreed last month to launch an investigation into the practice by some insurance firms of charging current customers higher rates on renewal than the rates offered to new clients.
Welcoming the announcement that the Central Bank will review the issue, Doherty said insurance companies in the Irish market are using dual pricing to target customers who are more likely to renew and less likely to switch or shop around.
He said customers then face higher prices, which he said is known as the “loyalty penalty”.
“Not only is this done without the knowledge of consumers, but it is known to target low-income and vulnerable groups, with some being charged premiums more than 100% higher than the average price for the same risk profile.
In a statement today, Insurance Ireland customers can get very good deals by shopping around regularly.
“We would advise them to do so as they would for other services and utilities. Insurance Ireland understands from media reports that the Central Bank of Ireland intends to assess adherence to the Consumer Protection Code.
“Insurance Ireland will seek clarity from the Central Bank on the scope of this assessment and will engage constructively on it. It is important that any market study fully considers the operation of the market to ensure a balanced approach is achieved for all customers. Pricing decisions are commercial matters and are the sole responsibility of individual insurers,” said the statement.
The assessment by the Central Bank has also been welcomed by Brokers Ireland, which represents over 1,250 broker firms.
“It is not acceptable that any insurer should adopt as a component of its business model any practice which is fundamentally anti-consumer,” Cathie Shannon, Director of General Insurance at Brokers Ireland.
“The Central Bank is the authority charged with consumer protection. Insurance is an essential part of life for consumers and businesses. It is not a luxury product but one that is mandatory in the case of motor vehicle owners and practically compulsory for those home owners who have mortgages.
“Almost every adult in the country will purchase insurance at some time in their life. The selling of insurance must be operated at every level with the utmost integrity, fairness and transparency,” she said.
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