The pros and cons of dual pricing - East Coast FM

Image The pros and cons of dual pricing - East Coast FM

The Central Bank of Ireland recently concluded the second stage of its investigation into dual pricing practices in Ireland's insurance market and found that the majority of insurers apply it in some form.

With the Central Bank's final recommendations due sometime next year and with separate legislation currently before the Dáil, our Head of Communications at bonkers.ie, Daragh Cassidy appeared on East Coast FM to discuss dual pricing, its impact on consumers, and how to get a better deal on your insurance cover.

Here’s an outline of the main questions answered by Daragh in the interview.

What is dual pricing?

There are several names for dual pricing, including price discrimination, differential pricing and loyalty premium. This is when a consumer, particularly in the insurance sector, is charged more than what a new customer would be charged.

For example, a customer who has been with their car insurance company for 4 or 5 years may be charged €500 for their premium upon renewal. A new customer shopping around with a similar profile may be offered €400.

There can be some benefits to dual pricing that sometimes people may not actually see, so we need to be careful when we talk about banning dual pricing.

So how do we know if we are being overcharged?

It’s tough to know because obviously, you’re never going to be told.

When you get your renewal quote for car or health insurance, use this as a starting point. Sometimes people think that because they’ve been a loyal customer and had no claims for a number of years, that they’re going to get the best deal. That’s not always the case. You should ring up and see if you can negotiate that quote downwards.

An easy way to see if there are cheaper prices out there is to go on and input a quote as if you were a new customer. Go online to the website and pretend you’re a new customer, but put in the exact same details and see what quote you get. 

If you do get a lower quote, you can use this as a really good bargaining chip with your insurance provider.

Can you get the provider to give you the same deals as new customers?

This concept of dual pricing does exist in other industries too, like broadband and TV, although the media focus the past few years has been on the insurance sector. 

If you’re prepared to ring up and negotiate, you may be able to get a better offer. The key thing here is that people need to be proactive. You work hard for your money, so it’s important to make sure it works as hard for you. 

If you see an ad for a cheaper offer that’s being offered to new customers, you can of course ring up and threaten to leave. Usually, you’ll find that the supplier will be willing to negotiate or give you wiggle room.

A lot of the time these deals for new customers may be loss leaders that they’re offering to encourage people to switch, but they may not be profitable for the provider. Virgin Media offer new customers lower prices, but the company made a loss last year. 

There are pros and cons to dual pricing, so we’re being a bit naive to think that if dual pricing were to be banned that everyone would be offered the lower price for their broadband. 

Consider switching

Do you feel like you’re being overcharged on insurance premiums? It’s important to consider all options available to you.

You can easily compare various insurance types on bonkers.ie in just a few clicks. It’s quick and easy to do, so try it today and see what you could save.

If you’re looking to save money on insurance, why not take a look at the following blogs and guides?

If you have any questions regarding dual pricing or insurance, don’t hesitate to reach out. You can contact us through our social media pages. We’re on Facebook, Instagram, or Twitter.