Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I ask Mr. Cross to address the issue of the overall quantum of price gouging or additional charging that is going on, affecting 3.5 million customers per annum. Has the Central Bank carried out analysis on that? The Financial Conduct Authority, FCA, in the UK , in the context of its ultimate ban, which does allow for discounts but no price walking from any year, estimates that a benefit to consumers of up to £11.2 billion as a result of that ban. Has the Central Bank carried out any type of analysis on that issue?

I would not oversell the benefits in terms of the discount, particularly in the context of the motor insurance sector. The Central Bank's own analysis has shown that the actual premium compared with the technical premium is 0.98, which means it is a reduction, on average, of 2% on the actual premium or the cost of the policy, and that is recouped immediately in year one. It is a bit more beneficial in the context of home insurance. My key point, which relates to the last thing Mr. Cross mentioned about behaviours, is that I do not believe that is where people are at. I do not believe that if a person gets an insurance policy today that is €300 but the company is kind of flagging that it will be €550 next year, the person will be deterred from taking it. He or she will take it because it is a good offer today. Unfortunately, we have this behaviour whereby people renew. We have the same issue in the context of financial institutions, where not enough people are switching and so on. That is a problem.

That takes me to the core issue. These insurance companies are looking at the behaviour of customers. They are using artificial intelligence and machine learning. They are doing so in two ways. One is to try to retain the 20% of customers who switch every year, but they are also looking at pricing levels for the other 80% of customers. Does the Central Bank have sight of those pricing models, which are repeatedly run through using machine learning to ensure they hit the pinch point or the sweet spot at which the companies can charge at a certain level without losing custom? Has it been able to go deep into those models? Can our guests assure us that those models do not discriminate against the elderly, those with disabilities, those who have low levels of financial literacy or those with learning difficulties, for example? Has the Central Bank done that? This is an ongoing and very common practice.