Mr. Gerry Cross:

I thank the Deputy. There are two or three aspects to that. One is specifically on the proposal, the reasons for it and whether it is the right one. The second, which is the heart of the matter, is how we make sure it works and is not circumvented. That is a really important question. The third aspect goes to the overall culture within parts of the insurance sector.

The Deputy asked about the data. We looked at the data in great detail, as he is aware. Many of the figures and details on that are set out in our consultation paper and the final report accompanying it. It shows that although there are definitely significant benefits to policyholders from this ability to get discounts, they are, on balance, outweighed by this aspect of, as we described, price walking. The benefits are less than the detriments. It is very important to allow discounts to continue to be effective. What is crucial, and this goes to the Deputy's point in respect of prices being hiked up in the second year, is that in purchasing their insurance, customers are not tempted in by a misunderstanding of what they are buying or a misunderstanding of the reality of the premiums. That is why it is really important that in this new regime in respect of new customer discounts it will be clear what the amount of the discount is and what it will go to in year two. That is the right balance. The Deputy is correct that this is not a straightforward equation, but we believe that is the right balance to retain the benefits for new customers while being clear that they are not being misled and do not misunderstand the situation. That can be addressed.

The second part of his question, which is enormously important, is how do we ensure this is working as it ought to work. Of course, that comes down to the insurers. There is no question about that. As I stated at the start of the meeting, the insurance sector and insurance firms need to be trustworthy. That is crucial to the functioning of any financial sector and it is certainly the case for the insurance sector. It will be our role to supervise this. We have introduced requirements in our proposals. The first is that the board and the company will, each year, assess the pricing practices of the company. We are putting responsibility on the board to check and confirm not only that it is complying with these rules but that, in general, it is complying with pricing practices that respect and prioritise the interests of customers. We will be supervising that. We have designed the regulation to be clearly worded in what it demands. We will be supervising it to ensure it is implemented in spirit and more generally to ensure the interests of customers are prioritised.

Third, there is the broader issue of the overall level of behaviour and culture in the insurance sector. I will be happy to come back to that issue. It is very high on our agenda and I am happy to say more about how we have supervised and will continue to supervise it and how we are enforcing it. Ultimately, it is the issue here. It is one thing solving the price walking issue, which is an important aspect, but, more generally, we wish to ensure the behaviours of the industry are in the interests of policyholders.