Sinn Féin Finance spokesperson Pearse Doherty TD has welcomed the decision of the Governor of the Central Bank to look into the issue of dual pricing in the insurance market, but has warned that anything short of banning the practice will be a bad result for Irish consumers.
Deputy Doherty wrote to the Governor of the Central Bank requesting an investigation into the practice of price discrimination on 25th September, and on 16th October submitted a formal complaint to both the Central Bank and CCPC requesting an investigation and justifying a banning of the practice of dual pricing in the insurance market. The Central Bank Governor responded to Deputy Doherty’s request this afternoon.
Teachta Doherty said:
“On September 25th I wrote to both Chairperson of the CCPC and the Governor of the Central Bank requesting an immediate investigation into the practice of dual pricing, or price discrimination, by the insurance industry. I also got the agreement of the Finance Committee to investigate this practice.
“On 16th October I submitted a lengthy complaint to both the Central Bank and CCPC requesting an investigation into the practice of dual pricing and justifying a ban of the practice in the market.
“Insurance companies in the Irish market are using dual pricing to target vulnerable customers who are more likely to renew and less likely to switch or shop around, and then charge them with extortionate prices. This 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.
“A recent study by the Financial Conduct Authority in Britain found that price discrimination resulted in 6 million policyholders being overcharged a combined £1.2 billion in 2018 alone. They are now considering regulatory intervention that would ban the practice.
“In the United States, dual pricing has been made illegal in as many as 17 states, including California and Florida.
“Irish consumers deserve the same protections as anyone else. But Irish regulators have done nothing to confront this practice.
“I welcome Governor Makhlouf’s response to my complaint. However, I would view with caution his plan to carry out a ‘review’ of the practice.
“We want an investigation into this issue immediately, with a clear and short timeline for its conclusion.
“Following an investigation, we want to see the practice banned.
“The Consumer Protection Code 2012 makes clear that insurance companies should act honestly, fairly and professionally in the best interests of consumers.
“Dual pricing is practiced without the knowledge of consumers, discriminating against vulnerable groups and loyal customers, and undermining the integrity of the insurance market.
“While the Central Bank has no role in setting premium prices, it is able to ban pricing practices that are not compliant with the principles of fairness and transparency.
“It is clear therefore that the Central Bank has the power to ban dual pricing. Irish consumers deserve no less.
“I will be meeting with the Governor in the coming weeks to discuss my submission and make the case for banning the practice of price discrimination by the insurance industry.”