We use cookies to collect and analyse information on site performance and usage to improve and customise your experience, where applicable. View our Cookies Policy. Click Accept and continue to use our website or Manage to review and update your preferences.


Insurers warned on pricing practices
Central Bank of Ireland Pic: RollingNews.ie

09 Sep 2020 regulation Print

Insurers warned on pricing practices

The Central Bank has urged insurance companies to immediately review the way they charge consumers, after the first phase of a review found “weaknesses” in some insurers’ pricing practices.

The regulator is examining differential pricing, where insurers charge different premiums to customers with similar risk profiles. This could include cases where customers are charged differently, depending on how likely they are to shop around and switch providers.

Letter to insurers

The Central Bank is examining whether customers are being treated fairly, and whether the use of these practices is in line with its Consumer Protection Code.

The first part of its review included an analysis of the market, following which the regulator sent a letter to insurers setting out how it expects insurance products to be priced.

The Central Bank said that, while a number of firms maintained that they did not use differential pricing, most did engage in the practice through various techniques.

Honesty and fairness

“Policyholders have a reasonable expectation that their insurance firm will act with honesty and fairness, and that they will act in the best interests of their customers,” said director of consumer protection Grainne McEvoy.

“This includes having in place a pricing policy that is fair, transparent and discloses material information to customers in a way that is informative,” she added.

The bank said it was “not always evident” that insurance companies’ boards had appropriately considered or discussed the impact of their firms’ pricing practices on their customers.

“There is insufficient evidence of a customer-focused culture in respect of pricing decisions and practices,” it added, saying firms had to ensure that customers were at the centre of pricing decisions.

Controls

The regulator has called on insurers to look at their own pricing methods, taking into account its definition of differential pricing.

It also wants boards to take responsibility for the impact of differential pricing on customers, and to ensure that pricing practices are well-governed, with effective controls and oversight.

The bank also wants a consumer-protection risk framework in place to ensure consumers are treated fairly in accordance with the Consumer Protection Code 2012.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland

Copyright © 2024 Law Society Gazette. The Law Society is not responsible for the content of external sites – see our Privacy Policy.