Tough talk can’t mask the Central Bank’s pale protection

Donal O'Donovan

Derville Rowland, director-general for financial conduct at the Central Bank of Ireland

Derville Rowland, director-general for financial conduct at the Central Bank of Ireland

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Derville Rowland, director-general for financial conduct at the Central Bank of Ireland

September 30 2021 02:30 AM

The Central Bank is warning insurers it will crack down if they treat customers unfairly – but the tough talk belies the reality of regulators’ softly-softly approach.

In a speech to an insurance industry forum organised by Deloitte yesterday, Central Bank director-general for financial conduct Derville Rowland supported her claim by citing two cases where the Regulator has been publicly and definitively behind the curve – the dual-pricing scandal in motor and home insurance, and the business interruption claims that plagued small business owners last year.

Differential pricing and business interruption insurance demonstrate the Central Bank’s focus on conduct, culture and customer treatment, insurance bosses were told.

No-one knows better than those same bosses that the claim is at odds with reality.

Take differential pricing: this is a polite term that describes the outrageous practice of charging customers different prices for the same insurance, after using sophisticated data analysis to identify the customers more vulnerable to missing the fact they’ve been overcharged. It flies in the face of any notion of fairness or consumer protection.

When the Irish Independent began questioning the Central Bank about it back in 2018 they tried to stonewall. Even as the evidence became overwhelming, the Central Bank refused to even say if they were aware ‘big-data’ programs were being used to pick off less-savvy consumers – insisting that anyway, as regulators, they had no role when it came to pricing.

Only sustained media and political attention kept the issue on the public agenda. Sinn Féin proposed a Bill to ban the practice and the current Fine Gael/Fianna Fáil/Green coalition included a commitment to remove dual pricing in their June 2020 Programme for Government.

The Central Bank in contrast took until July of this year before recommending legislation to phase out so-called insurance price-walking – the practice of hiking prices for loyal customers. That will eventually happen from next year – a staggeringly slow and limited response that’s given insurers nearly three years of extra time to price-gouge their most vulnerable customers.

Business interruption cover is an equally poor example. The Central Bank says it was all over the issue as soon as the pandemic started shutting businesses, setting to work parsing contracts and breathing down the necks of insurance providers.

But it’s hard to reconcile that with what we know about the hundreds of pub owners forced to take action into their own hands when their insurers failed to pay. They challenged the insurance giants through the courts, to force them to honour policies.

The publicans eventually won their case – but only by going to court themselves, in a country where the costs of High Court actions are potentially ruinous. Even now, after all the effort to validate their policies many of those businesses still don’t know what they’ll be offered to settle the claims.