Insurance Europe, the European insurance and reinsurance federation, have published their comments regarding a recent consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on differential pricing as concerns have been raised.
In July 2022 EIOPA launched the three-month long public consultation in response to concerns that some differential pricing practices can be detrimental for consumers and result in unfair treatment.
Through this consultation EIOPA aims to strengthen consumer protection by putting an end to discriminatory consumer treatment and to promote increased unity in the supervision of differential pricing practices.
In its recent comments, Insurance Europe said: “The potential concerns raised by the European Insurance and Occupational Pensions Authority (EIOPA) are significant and, if pricing practices resulting in unfair outcomes for consumers were identified in the market, these concerns would need to be addressed. Access to insurance and fair treatment are both vital.
“As a European federation, Insurance Europe is not able to comment on the specific questions raised. Insurance Europe does not have a pan-European picture of the prevalence of differential pricing practices, and it is beyond its remit to delve into the individual commercial decisions of insurance companies. Neither Insurance Europe or its member organisations conduct market surveillance in this area.
It added: “The decision to publish measures targeting pricing and commercial decision-making is unprecedented and must be treated sensitively to avoid calling on national supervisors to overstep their specified mandates.”
Additionally, Insurance Europe highlighted that, if action is needed, there are several rules set by different authority bodies that must be taken into account.
These include national and EU rules, for example Article 17(1) of the Insurance Distribution Directive (IDD) which requires that in its sales activities vis-à-vis policyholders, the insurer must always act honestly, fairly and professionally in their best interests. This is supplemented by various national provisions in industry-specific regulations, and broader contract law. The application of this law is monitored by the national courts, national supervisors or consumer protection bodies.
Insurance Europe also noted that EIOPA and national competent authorities (NCAs) have an extremely limited role in taking action that directly impacts individual insurers’ ability to set prices and commercial terms.
It added: “In order for EIOPA to take action, there must be a clear need for EU-level action that cannot be achieved at member state level. Article 21 of Solvency II stresses that cost management is primarily the responsibility of the product provider and the supervisor only insofar as the tariff must not jeopardise the financial situation of the insurer.”
