Vol. 1004 Wednesday, No. 3 17 February 2021 DÍOSPÓIREACHTAÍ PARLAIMINTE PARLIAMENTARY DEBATES DÁIL ÉIREANN TUAIRISC OIFIGIÚIL—Neamhcheartaithe (OFFICIAL REPORT—Unrevised) Insurance (Restriction on Differential Pricing and Profiling) Bill 2021: Second Stage [Private Members] � � � 219 17/02/2021U00500Ceisteanna ó Cheannairí - Leaders’ Questions � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 248 17/02/2021Y00900An tOrd Gnó - Order of Business � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 256 17/02/2021CC00050Ceisteanna ar Reachtaíocht a Gealladh - Questions on Promised Legislation � � � � � � � � � � � � � � � � � � � � � � 262 17/02/2021DD03000Message from the Standing Business Committee of Dáil Éireann � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 267 17/02/2021DD03200Rural Equality Bill 2021: First Stage � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 267 17/02/2021EE00900Principles of Social Welfare Bill 2021: First Stage� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 269 17/02/2021EE01700Civil Registration (Right of Adoptees to Information) (Amendment) Bill 2021: First Stage � � � � � � � � � � � � 270 17/02/2021FF00800Covid-19 (Agriculture, Food and the Marine): Statements� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 272 17/02/2021UU04700Land Development Agency Bill 2021: Order for Second Stage � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 306 17/02/2021UU05100Land Development Agency Bill 2021: Second Stage � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 307 DÁIL ÉIREANN Dé Céadaoin, 17 Feabhra 2021 Wednesday, 17 February 2021 Chuaigh an Leas-Cheann Comhairle i gceannas ar 10 a.m. Paidir. Prayer. Insurance (Restriction on Differential Pricing and Profiling) Bill 2021: Second Stage [Private Members] 17/02/2021A00200Deputy Pearse Doherty: I move: “That the Bill be now read a Second Time.” Lé tréimhse ró-fhada anois, tá na comhlachtaí árachais ag cur costas ró-mhór agus míchóir ar thiománaithe agus ar úinéirí tithe. Tá sé seo ag tarlú bliain i ndiaidh bliana. Tá an Bille seo chun é sin a athrú. Tabharfaidh sé tús áite do thiománaithe agus d’úinéirí tithe, a bhfuil árachas acu, ag laghdú costas. Tabharfaidh sé ar comhlachtaí árachais a gcuid cleachtais a mhíniú. Cuirfidh mó Bhille deireadh le déphraghsáil, cleachtas ina bhfuil a fhios ag comhlachtaí na custaiméirí atá níos toilteanaí athnuachan a dhéanamh ar pholasaithe agus dá bharr sin, gearrtar praghsanna níos airde orthu. Today is the day for this Dáil to end the insurance rip-off. Today is the day for this Dáil to put consumers first and send a clear message to the insurance industry that the game is up in respect of exploitative practices in home and motor insurance. For too long, the insurance industry has been able to price-gouge its customers. Most people believe their insurance pre- mium is based on how likely they are to make a claim and how much that claim would cost their insurer, but that is not the whole story. Last November, the Central Bank found that insurance prices had risen by 35% in the past decade despite the cost of claims falling by 9%. All present know that insurance companies are engaging in a price-gouging practice known as dual pricing which they use to charge customers much higher prices than the actual cost of their policies. It involves the use of complex models to identify customers who are likely to renew and then charge them the highest prices possible before they are tempted to switch to a competitor. Instead of rewarding customers for their loyalty, the companies increase the customer’s premium in the knowledge that he or she is more likely to renew than to switch. That is the loyalty penalty. I refer to the case of Ray, for example. He received a renewal quote of €1,420 from Lib- erty Insurance for his car insurance, only to be offered a premium of €680 for exactly the same 219 Dáil Éireann policy with exactly the same provider when he went online. He was overcharged by 109% or €740. That is the loyalty premium that we, in this House, are going to ban. In September 2019, I wrote to the Governor of the Central Bank requesting an investigation into the practice of dual pricing, and after meeting with the Governor, the Central Bank agreed to carry out an investigation into the complaint I submitted. In January 2020, the Central Bank began its investigation, and its interim report in December confirmed what we had said in our major complaint, that is, dual pricing is endemic right across the insurance market, affecting more than seven in ten Irish policyholders, many of whom are overcharged by hundreds of euro every year. While the insurance industry has been allowed to rip off Irish customers, action has been taken elsewhere. Between 2014 and 2017, 20 US states prohibited the practice of dual pricing, including California, New York and Florida. These bans were recommended by the American Association of Insurance Commissioners, which found that the use of dual pricing unfairly discriminated and called for the practice to be banned. The association stated that “two insur- ance customers having the same risk profile should be charged the same premium for the same coverage”. That is the principle of fairness on which this legislation is based and built. The Financial Conduct Authority, FCA, in Britain began its own investigation into this practice in 2018. It published its final report in September. Its findings were stark and its solu- tion was clear, that is, to ban dual pricing. The British regulator found that in 2018 alone, dual pricing resulted in 6 million policyholders being overcharged a combined €1.4 million. It also concluded that dual pricing distorted competition. While others, including the industry and, unfortunately, the Minister of State with responsibility for insurance, have argued that a ban on dual pricing would undermine competition and deter new entrants, the British regulator, the FCA, found the opposite to be the case, that this type of price discrimination has a negative effect on competition while removing dual pricing would improve the nature and intensity of competition. For the benefit of the Minister of State, I will quote the FCA, “This would mean firms competing in a more effective and innovative way, which should lead to lower overall costs for supplying insurance, more intense competition and ultimately lower average prices paid by consumers.” The British regulator has responded by announcing it will ban dual pricing this year. Irish consumers deserve no less. This Bill will ban price gouging activity. It will ban dual pricing by requiring insurance providers to use only rating factors directly linked to the risk to be insured so that renewing customers can no longer be charged artificially high prices based on their likeliness to renew, their economic background, their spending patterns or any other trait not linked to risk. It will increase transparency in how a customer’s premium is priced. Whenever a customer receives a quote or premium from an insurance company, the insurer will be required to tell the customer the rating factor used to calculate the price and how much of that price is to cover the expected cost of claims, how much is to cover the cost of servicing and how much is to feed the profits of insurance companies. This Bill will ensure that transparency. Crucially, the Bill will empower the Central Bank to draw up the regulations that will gov- ern this ban, using the expertise of the Central Bank to remove this practice from the insurance market. Some in this House may have concerns that the Central Bank, not the Dáil, is best posi- tioned to determine how dual pricing is removed from the insurance market and this legislation answers those concerns. It will require the Central Bank to produce a code of practice which will assist the courts and the Financial Services and Pensions Ombudsman where an insurance 220 17 February 2021 company has broken these new laws. The Central Bank will be required to publish an annual report, assessing the industry’s compliance with the legislation. Where an insurance company continues to use price gouging practices against customers, the Central Bank will have the power to sanction them. The legislation will reduce prices for consumers who for too long have been ripped off by the insurance industry. The FCA found that a ban on dual pricing in the British market would bring real benefits to consumers, saving them between €4.8 billion and €12.9 billion in the next decade through lower prices. Using a data set of 17 million observations across 6 million unique insurance policies, the FCA has modelled what a ban on dual pricing would look like. It has found that a ban on dual pricing would reduce insurance premiums by up to 27% for ho- meowners who renewed up to ten times and up to 34% for motorists who have renewed for a similar tenure. This legislation provides for the same remedy to ban this price gouging practice. Its effects would be the same, that is, a reduction in prices for Irish consumers. The Minister of State has again claimed that the legislation would prohibit discounts on insurance. Let me be clear: he obviously does not understand the legislation or the price remedy to be introduced here or what is happening across the water, on which this legislation has been built. It will do no such thing.