Central Bank is set to be quizzed on 'insurance rip-off'
The Central Bank is to be called before the powerful Oireachtas Finance Committee to explain why it is not clamping down on insurers charging existing customers more than new ones.
Several insurers in this market are using so-called dual-pricing software to identify customers who they can overcharge, it has been alleged.
Regulators in Britain have threatened to fine insurers engaged in the practice which sees loyal customers paying higher prices when they renew home and motor cover.
But the Central Bank of Ireland has been stonewalling on calls for it to say if it is even aware of the use of big data by insurers to cherry-pick vulnerable customers for higher prices, a practice known as dual pricing.
Dual pricing is the practice where insurers sign up customers on artificially low premiums for the first year and they quote hugely inflated premiums to renew policies.
Customers less likely to shop around and older people are identified and sent the highest renewal quotes.
Sinn Féin finance spokesman Pearse Doherty has now got the Finance Committee to agree to probe dual pricing.
It follows repeated exposure of the dual-pricing practice in this publication.
Mr Doherty has written to the Central Bank and the Competition and Consumer Protection Commission asking them to probe the practice. He told the two bodies that insurers are imposing "unjustifiable penalties" on loyal customers.
Both the Central Bank and the Competition and Consumer Protection Commission are now to be invited to the Finance Committee to explain why they are not clamping down on dual pricing.
The dual-pricing issue, which is also known as price optimisation in the industry, was also raised at leaders' questions in the Dáil yesterday.
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Mr Doherty was hit with a huge renewal quotation for his motor policy. The TD was quoted a renewal premium of €855.
But he went online and entered his details and got a new customer quotation which was almost €300 lower, despite dealing with the same insurance company.
Chairman of the Consumers' Association Michael Kilcoyne has described dual pricing as anti-consumer and said it punished vulnerable customers for their loyalty.
Asked about dual pricing, the Central Bank insists it does not have a role in pricing by insurers.
But it would consider the work being undertaken by the UK's Financial Conduct Authority on dual pricing and its impact on consumers.
A recent report compiled by leading consultancy to Irish insurance companies, Milliman, says: "Several Irish insurers and brokers have embedded price optimisation algorithms within their pricing."
Mr Doherty said dual pricing is unfair, undermines consumer protection and must end immediately.
"While we in Sinn Féin move forward in finding solutions to end this practice, I would advise customers to seek online quotes before automatically accepting the renewal quotes offered by the insurance companies."
In Britain, the Competition and Markets Authority and the Financial Conduct Authority are both investigating insurers there over the penalising of loyal customers through dual pricing.