(Finance) – The European supervisory authority for insurance and occupational pensions (EIOPA) has launched a public consultation lasting three months to examine how insurance companies charge customers different prices for the same type of coverage. Pricing practices in which consumers with similar risk characteristics and service cost are charged different premiums for the same insurance products will be investigated.
The consultation intends to investigate, in particular, the so-called “price walking“, ie the practice of increase the premiums in the renewal phase on the basis of the analysis of the specific characteristics of a particular consumer, to predict behavior not related to the risk or cost of the services, and to understand to what extent he will tolerate the premium increase before purchasing coverage from other companies.
While the current EU legislative framework allows for certain tiered pricing practices, such as commercial, marketing and subscription discounts, EIOPA believes that “some types of tiered pricing practices do not comply with the applicable framework and lead to a unfair treatment of consumers“. Price walking practices can have a negative effect on policyholders who are unlikely to switch suppliers. The practice unfairly penalizes loyal customers and it can disproportionately affect vulnerable groups such as the elderly.