Insurance Differential Pricing – Brokers Ireland Welcome Study But Way to Go Yet
Mon Nov 16 2020
Brokers Ireland welcomed the new study from the Central Bank of Ireland, ‘Differential Pricing: The Economics and International Evidence’ saying it is critical that consumers and businesses not be harmed as a result of pricing models adopted by insurers operating in the Irish Market.
Cathie Shannon, Director of General Insurance at Brokers Ireland, which represents 1,225 Broker firms, said: “Today’s study clearly marks a step along the way towards addressing the issue.
“The report raises concerns about market features or firm actions that serve to reduce the propensity of customers to shop around for better offers or to negotiate. However, there is a way to go before we know what action, if any, the Central Bank will take in its ongoing investigation of differential pricing in the Irish home and motor insurance markets.
The reality is while technological advancement facilitates shopping around, consumers don’t necessarily have the knowledge required to distinguish between the different products available to them to identify the optimum one to suit their needs, or indeed the time to undertake the necessary research. Often, the cheapest product will not be the right one for the customer, or indeed another insurer might have a better product available for that customer at a lower cost.
That is the whole raison d’etre for Insurance Brokers in the market. Only Insurance Brokers search the market for their customers and make a recommendation to the customer of the most suitable policy to meet the customer’s needs, with the cost being just one element that is considered. Only Insurance Brokers have the knowledge and expertise and are not tied to any one insurance company,” she said.
She said today’s report is a welcome part of the insurance reforms noted in the Programme for Government. “It is to be hoped that in the future, all those in need of insurance, whether that be personal insurance such as motor insurance or commercial insurance, will benefit from reforms, as steps are taken to address issues in the Irish market. Insurance is significant overhead for any business or consumer. It is an essential and not a luxury. Insurance companies must operate at every level with the utmost integrity, fairness and transparency”, she said.