Bill to enhance transparency around deductions from insurers’ Covid settlements
A new bill will aim to “enhance transparency” around the practice of insurers deducting government payments from Covid-related claims settlements.
The Department of Finance has begun drafting the Insurance (Miscellaneous Provisions) Bill, which will address insurance-related issues that have arisen since publication of the government’s action plan for insurance reform.
A key provision will require insurers to inform customers of any State supports they deduct from claims payments and enables the Central Bank to collect data on such deductions through the National Claims Information Database.
“This will enhance transparency around the issue and help to better inform policymakers to address it in future situations,” the Department said.
The bill will also require the Central Bank to report to the finance minister about any steps it takes to address the practice of price walking.
There are also a number of technical amendments in the bill, clarifying issues arising following the enactment of the Consumer Insurance Contracts Act 2019 and rectifying issues with the temporary run-off regime for UK and Gibraltar-based insurers.
Finance minister Paschal Donohoe said: “Significant progress has been made to date through the action plan for insurance reform, including the introduction of the personal injuries guidelines earlier this year and the expansion of the National Claims Information Database to track employer and public liability claims.
“I believe the bill will serve to further advance this reform agenda and continue this important work, in line with the government’s ongoing commitment to prioritise reform of the insurance sector in the interests of consumers, businesses, and voluntary groups.”
Seán Fleming, minister of state with responsibility for financial services, credit unions and insurance, added: “The practice of applying a loyalty penalty to long-standing customers, known as price walking, will be banned next year.
“This bill will protect motorists and homeowners from this practice in the insurance industry. This bill will facilitate the Central Bank publishing data on how changes and savings for motorists and homeowners are being enforced.
“This bill will also introduce enhancements to the National Claims Information Database to collect data on the deduction of taxpayer supports to businesses by insurance companies from compensation payouts. This will allow the Central Bank to collect and publish this information.
“This will provide greater transparency and understanding of the prevalence of this practice by insurers. This in turn will ensure taxpayer interests are protected in the future. In addition, it also provides that consumers who have deductions from the value of their compensation are informed of this and explained as to why.”