Insurance Europe has published a robust response to the EIOPA consultation paper on differential pricing in the non-life insurance market.

Insurance Europe acknowledges that it does not have a pan-European picture of the prevalence of differential pricing practices and that it is beyond its remit to delve into the individual commercial decisions of insurance companies. Nevertheless, its key concern seems to be that EIOPA would be engaging in supervisory overreach by introducing measures that target insurers' pricing and commercial decision-making. Its main points are:

  • The existing national and EU rules that should be considered in assessing if further action is necessary, such as the Insurance Distribution Directive (IDD) requirement that insurance distributors always act honestly, fairly and professionally in the best interests of policyholders;
  • EIOPA and national competent authorities have an extremely limited role in taking action that directly impacts individual insurers' ability to set prices and commercial terms;
  • The IDD product oversight and governance (POG) rules are unlikely to be a sound basis for any action on this issue. The POG rules relate to product design and review and the impact on the product's target market, not the methodology used to determine individual prices;
  • Freedom to set prices is a key element of free and fair competition;
  • Best competition is achieved when there are numerous business models in a market, as long as there is transparency towards the individual consumer; and
  • There is no evidence that the use of artificial intelligence to set premium levels is damaging.

Link to the full response statement below:

Insurance Europe: Response to EIOPA consultation paper on differential pricing

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.