Business The European supervisor questions whether insurers charge fair prices to their most...

The European supervisor questions whether insurers charge fair prices to their most loyal customers

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The European Insurance and Occupational Pensions Authority (Eiopa) has opened a consultation process for the next three months in relation to a draft supervisory statement on differential pricing practices, in order to check whether price differences are justified charged by insurers to clients with a similar risk profile, particularly in the case of those who are more veterans compared to new ones.

For the purposes of this consultation, Eiopa understands differential pricing practices as those pricing techniques in which consumers with similar risk and service cost characteristics are charged different premiums for the same insurance products.

In particular, the supervisor points to what is known as “price walking”, which refers to the practice of increasing premiums when renewing car or home insurance after analyzing the specific characteristics of a consumer, thus anticipating behaviors not related to the risk or cost of the services, such as how much increase in premium you will tolerate before seeking coverage with other entities.

In this sense, the supervisor warns that, although the EU legislative framework allows certain differential pricing practices, such as commercial, marketing and subscription discounts, in his opinion “some types of differential pricing practices do not comply with the applicable framework and lead to unfair treatment of consumers”.

In particular, it considers that price reduction practices for new customers can have a detrimental effect on policyholders who are unlikely to switch providers and “unfairly penalizes loyal customers”, which can disproportionately affect vulnerable groups such as the elderly. .

Eiopa thus invites interested parties to provide their comments on the consultation document until October 7, 2022, by answering the questions through an online survey.

Source: Europa Press

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