Call to ban ‘appalling’ insurance price hikes
■ Firms quote inflated prices for year-two renewals
THE Central Bank has been urged to ban dual-pricing of insurance policies.
This comes after UK regulators began a clampdown on the practice, whereby insurers sign up new customers on artificially low premiums for the first year and then quote hugely inflated premiums to renew policies.
It typically happens with motor insurance. The practice has been described as a sinister attempt to exploit customers and play on their inertia.
Many customers do not realise that the renewal quote is often a try-on and they can often get a better deal after the first year if they scour the market.
Dual-pricing is thought to be one of the practices that have seen insurance costs surge in the last few years.
Dermott Jewell, of the Consumers’ Association, said dual-pricing was anti-consumer as it punished loyalty. “It is an appalling practice. People should never automatically renew, especially when it comes to motor insurance, as they are likely to get a bad deal,” he said.
THE Central Bank has been called on to ban dual-pricing of insurance policies.
This comes after UK regulators began a clampdown on the practice, whereby insurers sign up new customers on artificially low premiums for the first year and then quote hugely inflated premiums to renew policies.
It typically happens with motor insurance. The practice has been described as a sinister attempt to exploit customers and play on their inertia.
Many customers do not realise that the renewal quote is often a try-on and they can often get a better deal after the first year if they scour the market.
Dual-pricing is thought to be one of the practices that have seen insurance costs surge in the last few years.
Dermott Jewell of the Consumers’ Association said dual-pricing was anti-consumer as it punished loyalty.
“It is an appalling practice. People should never automatically renew, especially when it comes to motor insurance, as they are likely to get a bad deal,” he said.
“Insurers make a fortune out of you if you do nothing. You must check out other providers.”
In Britain, the consumer pro- tection regulator told insurance companies to stop discriminating against existing customers in favour of new business.
The UK’s Financial Conduct Authority said: “Firms should not give long-standing customers less attention than new customers or treat them in a way which results in poorer outcomes.”
And broker bodies have put pressure on insurers and their members to ensure that new and existing insurance customers are priced the same way.
Insurance experts here said insurers knew that many people would not question the renewal quote.
The advice to consumers is to seek out a good broker or do the footwork yourself in order to get a better deal.
Motorists should not tell insurers from whom they are seeking new quotes what they have been quoted from their existing insurers, as the quote would only be matched, not beaten, experts said.
Motorists are likely to find that an exercise such as this results in the existing insurer treating the motorist like a new customer and giving them a lower premium than the renewal quote.
Asked if it had any plans to clamp down on dual-pricing here, the Central Bank said it had no role in relation to either pricing considerations or competitiveness.
Claims
Its role was to ensure that firms assess risks appropriately and offer motor insurance at a price that adequately takes into account the conditions prevailing in the market, such as increasing claims costs.
“This ensures that firms have the ability to pay all policyholders claims without recourse to public funds,” the Central Bank added.
Insurance Ireland, the representative body for insurers, said it had no role in respect of the commercial decisions of any insurance company.