Finance Ministers welcome Central Bank’s Interim Report on Differential Pricing in the Insurance Market
Foilsithe
An t-eolas is déanaí
Teanga: Níl leagan Gaeilge den mhír seo ar fáil.
Foilsithe
An t-eolas is déanaí
Teanga: Níl leagan Gaeilge den mhír seo ar fáil.
New Office for Insurance Competition to be established tomorrow
The Minister for Finance, Paschal Donohoe TD, and the Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming TD, have today (Monday), welcomed the publication by the Central Bank of its Interim Report on its Review of Differential Pricing Practices in the Private Motor and Home Insurance Markets.
The report provides a progress update on the Review and outlines new insights from the Central Bank’s ongoing market analysis and consumer research. The Interim Report has found that:
Product complexity means most consumers have limited knowledge of how insurance operates. The Ministers note that differential pricing can be associated with both benefits and costs for consumers. The Central Bank’s interim report states that the completion of its analysis will be essential to ensure a full market perspective, evidence-based conclusions and appropriately calibrated regulatory interventions. The Central Bank expects to publish its final report in 2021. The publication of this interim report is an important step in terms of meeting the actions that relate to dual pricing (Actions 54 – 56) in the Government’s Action Plan for Insurance Reform, which was published on 8 December.
Commenting on the interim report, Minister of State Fleming said:
“I welcome the publication of this interim report, which marks an important milestone in the Central Bank’s review of differential pricing. I will be meeting with Insurance Ireland tomorrow and will press the need for insurers to treat their customers with both fairness and respect.” Minister of State Fleming went on to state, “I will also be exploring the opportunities to promote active competition, particularly when it comes to switching and how insurance pricing works. The new office for insurance competition will meet for the first time tomorrow.”
Minister Donohoe said:
“Publication of this Report is an important element of the Government’s commitment to insurance reform. While a number of emerging issues are being brought to light in this Report, it is important that we let the Central Bank complete its work before deciding how best to proceed. I would therefore caution against making kneejerk decisions based solely on this Interim Report, as to do so may have unintended consequences.”
Both Minister Donohoe and Minister of State Fleming reiterate that they believe the insurance industry needs to treat their customers fairly and in line with the Central Bank Consumer Protection Code. The same applies in relation to any practices in relation to pricing that may not be fair to their customers.
ENDS
Note to Editors:
Differential pricing, also called “dual pricing”, is the practice of quoting two different price points in different markets for the same product or service. The “different markets” could be differences between new and existing customers or between different channels for accessing the quoted price (e.g., via telephone versus online). The Central Bank, in late 2019, announced that it would carry out a study into the practice of differential pricing.
The Central Bank’s review into differential pricing is focussing on motor and home insurance, as the most widely held insurance products in Ireland. The Central Bank initiated a review into differential pricing to:
Its review commenced in January 2020 and is being carried out in three phases:
1. market analysis;
2. quantitative analysis and consumer insight; and
3. conclusions and recommendations.
The Central Bank’s final report is due to be published in 2021. This is a complex issue and will need careful consideration of any potential remedies, and what impact they would have on consumers in an overall sense.
The publication of the interim report is an important step in terms of meeting the actions that relate to dual pricing (Actions 54 – 56) in the Action Plan for Insurance Reform, which was published on 8 December. The Action Plan sets out 66 actions to bring down costs for consumers and business; introduce more competition into the market; prevent fraud and reduce the burden on business, community and voluntary organisations. The Plan will: