Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I welcome our guests from the Central Bank of Ireland back to the committee. I know they were with us just last week so I appreciate them coming back again. I am delighted the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has started our own process of having hearings on dual pricing. When I asked the committee to carry out this type of investigation on 24 September, at that stage the Central Bank was not carrying out its own investigation. The following day I wrote to the Governor of the Central Bank requesting an investigation into dual pricing, including the practice and the prevalence of dual pricing in the market, the cost of dual pricing to customers and what direct intervention could be made to protect customers from price discrimination. I welcome the fact that on foot of that request and on foot of the 130-page submission I made the following month, which is available to this committee as well, that the Governor of the Central Bank and the Central Bank have agreed to carry out the work Ms Rowland has outlined and I welcome the promptness of that response. I met the Governor last week and I was satisfied to hear about the work Ms Rowland has now outlined to the committee.

My view is clear. I believe dual pricing needs to be banned. We know insurance companies in Ireland are using big data and complex algorithms to set artificially high prices for insurance, particularly for those who are deemed less price-sensitive or for those who are more likely to renew with the companies. We know it targets customers who are less likely to switch. We can see from evidence that was gathered in Britain, and many of the insurance companies who operate here also operate in Britain, that the loyalty premium affects and hurts vulnerable customers. It particularly identifies the elderly, those with mental health problems and those in low-income households as those who are affected as a result of this.

The general manager of AIG appeared before this committee a number of weeks ago and he confirmed, while acknowledging his company does not operate dual pricing, that dual pricing is a policy that punishes loyalty with higher premiums. We know from the report of the FCA that was concluded just over a month ago that this affects 6 million consumers in Britain at a cost in overcharging of about €1.3 million per annum. We also see from some of the statistics, and unfortunately we do not have the statistics for Ireland but I welcome the fact the Central Bank is doing the analysis, that if one is renewing with an insurance company one is likely to be hit by a loyalty premium of 20% if one has renewed on four occasions or more and of 40% if one has renewed ten times or more.

I take on board the point Ms Rowland made that as opposed to individual case studies, we need to look at what is happening right across the industry and that is appropriate but it is important to put on record some of the case studies I have provided to the Central Bank, and we have numerous case studies. Take Ray for example, because this goes to the core of it. He renewed his motor insurance with Liberty Insurance and he got a renewal premium of €1,420. He entered the exact same details on Liberty Insurance's online website and he got a quote for €680. That is a 109% difference. Alex from Waterford works part-time and he renewed his motor insurance with AA. He received a renewal premium of €871. When he entered the exact same details on the AA website, he got a quote for €400. That is a 118% difference. There are many other examples I have been inundated with and I welcome people giving us their examples to show how unfair this practice is. It is known to hurt individuals. The Citizens Advice report in Britain in 2017 identified that it hit particular vulnerable groups such as older people, people with mental health problems, people with health problems and those with lower levels of formal education.

I want to ask the Central Bank some questions about the work it is proposing to do on foot of the request I made. To make sure we are on the same page, can I confirm quickly that the Central Bank will look into the practice of dual pricing by the insurance industry?