EIOPA supervisory statement takes aim at unfair ‘price walking’ practices

The European Insurance and Occupational Pensions Authority (EIOPA) has published a “Supervisory statement on differential pricing practices in non-life insurance lines of business“. The statement is focused on differential pricing practices, where some insurance manufacturers adjust prices based on characteristics that are unrelated to the underlying risks or the cost of service. Examples of such practices include repeated premium increases based on a customer’s low propensity to shop around or change provider because of price increases.
The supervisory statement clarifies that providers falling under the scope of the Insurance Distribution Directive (IDD) must act honestly, fairly, and professionally in accordance with the best interests of their customers. It also underlines that product oversight and governance processes should cover pricing techniques and ensure that these techniques do not adversely affect customers.
Insurance manufacturers can continue to offer premium discounts to attract and retain customers, but they should have adequate governance and product oversight measures in place to ensure that customers are not treated unfairly. EIOPA expects competent authorities to assess the adequacy and fairness of manufacturers‘ product oversight and governance procedures, sales processes, marketing and communication materials, as well as customer complaints related to differential pricing practices and to take appropriate action in line with national regulation.
Of particular concern are vulnerable customers such as the elderly, those with limited access to digital channels, and those with limited digital literacy. These customers are more likely to be impacted by differential pricing practices and may end up paying more than they should for insurance coverage.
EIOPA will continue to monitor the market and may consider adopting further measures where it identifies consumer detriment. The statement is in line with EIOPA’s goal of promoting consumer protection and ensuring that insurance markets function fairly and effectively.
In addition, the EIOPA has published a Feedback Statement from comments received on the Supervisory Statement (EIOPA-BoS-23/076).