Sinn Féin spokesperson on Finance, Pearse Doherty has described a report on dual pricing in the insurance market by the Central Bank as a “damning indictment” of the industry.
Mr Doherty said he has long called for a ban on the practice, which leads to consumers being charged artificially high premiums.
The Central Bank launched a probe in the wake of a complaint by the Sinn Féin politician back in October 2019.
The report which was published on Wednesday has proposed a ban of the practice of 'price walking', whereby insurers increase the premiums of loyal and renewing customers by stealth.
Speaking earlier, Mr Doherty said: “The report today by the Central Bank on the use of dual pricing by the insurance industry is a shocking indictment of the industry and how it rips off consumers.
“Dual pricing has been used to target customers who are less likely to shop around and results in them being charged artificially high premiums at renewal. This is the loyalty penalty.
“The Central Bank has found that renewing customers are paying significantly more than the actual cost of their policy. This impacts 3.5 million motor and home insurance policies.”
He said that previous Central Bank reports also showed that motor insurance customers are being overcharged by as much as 25 per cent a year, while home insurance customers are being overcharged by as much as 35 per cent.
Meanwhile, the Minister for Finance, Paschal Donohoe and the Minister of State with responsibility for Financial Services, Seán Fleming welcomed the report by the Central Bank of Ireland.
They both support the pro-consumer proposals to:
- Ban price walking in the motor and home insurance markets for personal consumers;
- Require providers of motor and home insurance to personal consumers to review their pricing policies and processes annually;
- Introduce new consumer consent and disclosure requirements to ensure the automatic renewal process is more transparent for all personal non-life insurance products.
Commenting on the report, Minister Donohoe said: “We would like to thank the Central Bank of Ireland for its detailed work and careful consideration in bringing this evidence-based report to fruition."
He said the Government welcomes the news that the Central Bank has proposed to end the practice of ‘price walking’; a form of dual pricing, as well as the news that it will commence a consultation on its detailed legislative proposals.
He added “As noted earlier this year, it was important to allow the detailed technical work be completed and, as this is a complex issue, it is essential that any regulatory changes are tailored to the specific circumstances in the Irish market, which is different to other larger markets.”