Written answers

Thursday, 24 October 2019

Department of Finance

Central Bank of Ireland Investigations

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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75. To ask the Minister for Finance if the Central Bank has officially commenced an investigation into whether dual pricing by the insurance industry complies with the consumer protection code and the law; when he expects this investigation to conclude; and if he will make a statement on the matter. [44157/19]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy is aware, the Minister of State for Financial Services and Insurance, Mr. Michael D’Arcy, TD, has raised the issue of dual pricing with the Central Bank at a recent meeting and sought their views.

In response, the Central Bank has confirmed that they will undertake a review of price optimisation, which includes the practice of dual pricing, as this has been identified as a potential consumer risk by the Central Bank in its sectoral risk assessment of the insurance sector.  I understand that the first step of this review will be a comprehensive data gathering and analysis exercise to determine the scale and prevalence of price optimisation across the insurance sector and its precise effects on consumer groups.  I also understand that the Central Bank intends to engage with key stakeholders, most notably the Competition and Consumer Protection Commission, on the terms of reference of this review and on the nature and scope of any potential remedies.  It is the Central Bank’s intention that the data gathering exercise will inform its views on any legal, supervisory and policy measures that may be required – but any such interventions will need to be carefully considered and may not be a matter for the Central Bank alone.  

I would agree with the Central Bank’s assessment of the complexity of this issue and that we will need to carefully consider any potential remedies, as to do so may improve matters for certain consumers while at the same time impact negatively on other consumers.  I do not think we are at the point of making conclusions on this issue and I will await the views of the Bank in this regard.  Given the need for extensive and meaningful consultation, scoping, data gathering and analysis by the Bank, it is not possible for me or the Central Bank to say when this review will conclude at this stage.  I would note the comments recently by insurers that they will engage constructively with the Central Bank and I welcome this, as it will be an important factor in how long the review takes. 

Finally, by way of information to the Deputy, I think it is important to also reference new measures being introduced by the Central Bank arising from recommendations of the Cost of Insurance Working Group from 1 November.  These are designed to increase consumer engagement and pricing transparency, and are as follows:

- For private motor insurance renewals, insurers will be required to provide the amount of the insurance premium paid in the previous year or, where any mid-term adjustments were made to the policy during the year, an annualised premium figure;

- Insurers will be required to provide the total premium for each policy option available for the customer in the renewal notices/quotations (i.e., comprehensive; third party, fire and theft cover; third party only, if offered by the insurer); and

- The renewal notification period will be extended from 15 working days to 20 working days for all non-life insurance policies.

I believe that each of these measures should assist consumers in making decisions at renewal time, including encouraging them to shop around and, if favourable to them, switch insurance provider.


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