A bill to restrict the practice of differential pricing by insurance companies has been criticised by Government for failing to acknowledge the positive effects of the practice. 

Sinn Féin's 'Insurance (Restriction on Differential Pricing and Profiling) Bill' was before the Dáil this morning. 

However, Minister of State at the Department of Finance Sean Fleming, accused Sinn Féin of picking one aspect of differential pricing, known as dual pricing, while failing to acknowledge that differential pricing can also help consumers save money.

Minister Fleming said that there is "no single bill" that can correct the problems associated with the cost of insurance.

Sinn Féin Finance Spokesperson, Pearse Doherty, told the Dáil that his party's bill, to end the practice of dual pricing by insurance companies, will require insurers to only use rating factors directly linked to the risk of being insured.

He said renewing customers should not be charged "artificially high prices" based on their "likeliness to renew, their economic background, their spending patterns or any other trait not linked to risk".

Mr Doherty appealed to the House to support his bill. 

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However, Minister Fleming moved an amendment to delay the bill by nine months to "allow for greater analyses" of the bill, after the Central Bank publishes its final report on differential pricing, which is due later this year.

The minister said that the findings of the report should be taken into account prior to further scrutiny of Sinn Féin's bill.

The Government argues that Sinn Féin's bill could end the use of insurance discounts, which Minister Fleming said could also be considered "differential pricing".

He told the Dáil that differential pricing is used across many sectors, including by gas and electricity providers and phone operators.

He said that the bill could impact people's ability to bundle together different insurance policies with one company, to secure a better price. He warned that it could reduce competition, by limiting a person's ability to shop around.

Mr Fleming acknowledged that differential pricing can "work against consumers".

However, he told the Dáil that the Government does not believe the bill is "the correct solution at this time" and could negatively impact consumers who "shop around".

Mr Fleming said that Sinn Féin are aware that it would have negative consequences for "hundreds of thousands of people". 

Sinn Féin's Mairéad Farrell accused Sean Fleming of engaging in "semantics" instead of dealing with the extensive research on "this price gouging practice".

Ms Farrell said that she was disappointed with the Government's amendment and said it was simply "kicking the can down the road".

The issue of dual pricing in the insurance industry is to be debated after an interim report from the Central Bank last December, which found a majority of insurers are using the controversial practice - also known as differential pricing - in calculating how much customers' premiums should be.

The Programme for Government includes a commitment to remove dual pricing from the insurance market but there are no specific recommendations on how and when that will be achieved.

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Although Director of the Alliance for Insurance Reform Peter Boland agreed dual pricing can allow savvy customers who shop around to secure cheaper premiums, he said there is another cohort of customers who are disadvantaged by the practice.

"Where we would have a serious concern is where people aren't necessarily familiar with searching online for deals, aren't as familiar with the ways insurers now sell their insurance," Mr Boland said.

"If that is being exploited then that needs to be stopped," he says, adding that what the Alliance is seeing that "the older cohort in particular would have an issue in this area because they tend to see loyalty as a virtue and loyalty is clearly not a virtue in this area".

Industry representative body Insurance Ireland accepted that the practice disadvantages a group of customers and said insurers are looking to address the issue.

According to Chief Executive of Insurance Ireland Moyagh Murdock there is a "network of independent brokers that can be utilised to get advice and help with shopping around".

Ms Murdock added that "the industry and Insurance Ireland are seeking to engage more with that vulnerable group to see where we can assist and they aren't disadvantaged through the differential pricing".

However, she said dual or differential pricing is a "phenomenon that is across a lot of industries, not just insurance.

"You get differential pricing in broadband, in financial packages, mortgages and it is a way of encouraging consumers to try new products ... once you start to introduce legislation in pricing then you can affect competition and that in the long run is not in there interest of the consumer," she added.

In the United Kingdom the Financial Conduct Authority has moved to ban the practice of dual pricing, while in the United States it is illegal in 20 states.

In contrast to the view of Insurance Ireland, Pearse Doherty believes dual pricing legislation would benefit competition in the market.

"The financial regulator in Britain has said that by banning this practice you will actually increase competition," he said.

"Dual pricing is where the insurance industry and your insurance provider gather information on you for one sole purpose ... to see how much they can push up the price at renewal before you will move to a competitor company.

"A new entry into the market has none of that information, has none of that historical data and therefore cannot come in and compete in terms of pricing.

"By banning this practice we level the playing field and we allow competition," Mr Doherty concluded.

Additional reporting Aengus Cox, Tommy Meskill