The European Insurance and Occupational Pensions Authority (EIOPA) – the insurance regulator in the European Union – is undertaking a three-month-long public consultation relating to pricing practices.

EIOPA is examining differential pricing practices in which consumers with similar risk profiles and characteristics are charged different premiums for the same insurance products.

Its draft statement focuses on “price walking”: increasing premiums at renewal based on "analysis of characteristics specific to a particular consumer to predict behaviours not related to risk or cost of services”.

At the start of the year, the UK banned renewal pricing increases that disadvantage loyal customers after a review found many insurers were increasing prices for renewing customers year-on-year in the practice known as price walking.

“EIOPA’s objective with the statement is to strengthen consumer protection,” it said. "Some types of differential pricing practices fail to comply with the applicable framework and lead to the unfair treatment of consumers.”

That might include how large a premium increase an individual consumer would tolerate before seeking alternatives.

“Price walking practices in particular can have a detrimental effect on policyholders who are unlikely to switch providers. The practice unfairly penalises loyal customers and can disproportionately affect vulnerable groups such as the elderly,” EIOPA said.

Its statement says insurers wishing to make use of differential pricing practices must demonstrate adequate measures to mitigate consumer risks.

UK regulator the Financial Conduct Authority (FCA) estimates its reforms, applying to personal motor and household insurers, will save consumers £4.2 billion ($7.9 billion) over a decade.

Feedback is invited until October 7 via an online survey here.