The Central Bank has published a report which examines cases of "differential pricing" across the world.  

"Differential pricing" is the practice of applying different prices to different customers for the same goods or service. 

The Central Bank is currently examining if this practice has left customers in the motor and home insurance markets worse off. An interim report on this investigation is expected next month. 

The report highlights the notion of a 'loyalty penalty' where customers end up being worse off by sticking with the same company over time. The study asserts that technology today can allow for 'more sophisticated' differential pricing. 

This can have a negative impact on society as more vulnerable customers can end up paying more. 

The report cites the UK's Financial Conduct Authority (FCA) 2018 investigation into differential pricing in motor and home insurance markets. 

It found the longer customers stayed with one insurance provider, the higher the profit margins were on their policies.

Four million home insurance customers were found to be paying 50% more than the market average. The total amount involved was estimated to be £1.25 billion.  

The FCA's report also found a third of customers who were paying over the odds displayed at least one characteristic of vulnerability including "low confidence in managing money". 

New rules on insurance pricing are expected to be published in the UK next year with one proposal being that renewal offers should be no higher than the equivalent new business price.  

The report also cites new rules introduced across several states in the US which prohibits the use of what are described as 'price optimisation techniques' not related to cost - in other words, using data like how many internet searches a customer may have carried out to compare prices on an insurance product. 

Using this type of data in setting a price is now prohibited and considered "unfairly discriminatory".