EIOPA consults on differential pricing practices in non-life insurance business

EIOPA is consulting a draft supervisory statement (SS) on differential pricing practices in non-life insurance lines of business. Differential pricing practices are those pricing techniques where consumers with a similar risk and cost of service are charged different premiums for the same insurance product (with the same terms and conditions) for reasons other than risk or cost of service.

In the SS, EIOPA has outlined its expectations of competent authorities in their supervision of the relevant POG requirements in articles 17, 20 and 25 of the IDD, including:

  • those differential pricing practices which are considered to lead to unfair treatment of consumers – examples include increasing the price of the policy at renewal stage based on the customer’s low propensity to shop around or the customer’s low price elasticity;
  • expectations on how insurance manufacturers’ governance measures should ensure that these practices do not unfairly affect consumers; and
  • expectations on how authorities should supervise the obligation to ensure these practices do not lead to the unfair treatment of consumers.

The consultation closes on 7 October 2022.

Lucy Hadrill