Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I thank Mr. Cross for that response, which brings me on to my next set of questions. I note the language Mr. Cross is using as we look at this practice. I am very clear I do not trust the insurance industry. I would not send it out to get a pint of milk for me. That is the reality. We know it has been the subject of dawn raids and European investigations and that what is happening here is price gouging. It is very important that, until this practice is banned, we inform people that they should shop around as renewals come in. This affects 3.5 million policies between motor insurance and home insurance. The analysis the Central Bank itself has carried out provided that figure as to the number of those renewing at a higher cost than the actual premium. Has the Central Bank been able to calculate the additional costs charged to customers every year as a result of this rip-off practice?

Mr. Cross mentioned a different approach from that of the FCA. In developing its view on banning this practice, the FCA considered the pricing policy the Central Bank is putting forward, which differs from the legislation I drafted. My legislation is more in line with what is happening in the North of Ireland. Unfortunately, that legislation was stalled for nine months by the Government parties but it just passed Second Stage last week. The question now is whether the Central Bank has overtaken that Bill, which is what we intended it to do when we made that first complaint. The Financial Conduct Authority looked at the Central Bank's proposal and said it "did not consider these options to be appropriate as they would also still allow firms to price walk, only limiting the extent to which they could do so".

That takes me back to my first point, which is that I do not trust this industry. The issue here is we know the percentage of people renewing motor insurance and home insurance annually is in the region of 80% over all the categories. No matter what and how much advice is given, for different reasons people will just renew. They may be too busy, they may forget or they may mean to get to it but not have time. That is why, as politicians and as the Central Bank, which has a role in consumer protection, we need to step in. The problem is price walking can still happen, although the duration is shortened. The increased premium may now only apply in the first year. We are going to allow insurance companies to charge a reduced premium for the first year to try to hook the customer but they can then substantially increase it in the second year. I am sure the Central Bank's argument is people should shop around, but the problem is, as I have said, that even though we know the industry is price gouging, 80% of people do not shop around. Is there therefore not a danger the insurance companies will just do what they have always done but just make the increase more heavily felt in the first-year renewal, resulting in this measure not being of any real benefit?

There will still be a dysfunctional market because there is a legal requirement for people to have motor insurance but what is basically being stated is that every single year they will have to go through this rigamarole. Discounts are important. In the North, in three weeks' time people will still be able to get a discount as a new customer. The only thing is that renewing customers must be afforded the exact same discount.