Oireachtas Joint and Select Committees

Tuesday, 19 November 2019

Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach

Tracker Mortgages and Differential Pricing in Insurance: Discussion

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein) | Oireachtas source

We know from the figures provided that of the 455 complaints closed thus far, there was a benefit to approximately 165 consumers from that cohort.

Mr. Deering stated the Financial Services and Pensions Ombudsman can deal with the practice of dual pricing if it is deemed unfair. I am not sure whether he is aware of the research done in the United States that suggested it is predatory and unfair when there are two prices for the same risk, or of that done by the UK Financial Conduct Authority, which identified the loyalty premium, whereby for every year a customer stays with a company, he or she will be hit by a higher premium. The company expects the customer to renew and, therefore, does not base the premium on the basis of risk but rather on the fact that because he or she is more loyal to the customer than the chairperson is, he or she will be hit with a higher premium, even though they could have identical risk. Would that be deemed as unfair? The data show that if a customer renews his or her contract four times with the same company, for example, he or she will be hit by a loyalty premium of 40%.

I have to hand a copy of a renewal premium from a customer. It is interesting that there was a renewal premium on 14 November, with the same policy number on each one. The renewal premium rose this year, from €1,044 to €1,256. That is dual pricing in action. Most people do not know there is dual pricing but the customer was sent two quotations from the company, with the same policy number, with a difference of more than €210 between the premiums. If it can be substantiated that the insurance industry is hitting customers with a loyalty premium based on the renewal and not the risk, could that be adjudicated by the Financial Services and Pensions Ombudsman in favour of the consumer?

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