Price walking to be banned in motor and home insurance markets
A ban on “price walking” in the Irish motor and home insurance markets will be brought into effect from July 2022, the Central Bank has announced.
From 1 July, insurance providers will not be allowed to charge relevant renewing customers a premium that is higher than they would have charged an equivalent year one consumer renewing their policy. However, to support competition and switching, new customer discounts will be allowed.
In addition, insurance undertakings and insurance intermediaries will be required to carry out an annual review of motor and home insurance pricing policies and processes to ensure sound practices.
The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022, published on Friday, will make Ireland the first EU country to ban the practice of price walking in the motor and home insurance markets.
The regulations set out the information that must now be provided to consumers in advance of the automatic renewal of an insurance policy, including the right to cancellation.
Derville Rowland, director general of the Central Bank, said: “Financial services providers are responsible for providing products that meet their customers’ needs fairly. We have consistently stated that we will intervene where we have reason to believe that unfair practices are occurring that take advantage of consumer behaviours and habits and we will prioritise the interests of consumers over the behaviours and conduct in firms.
“These new regulations will significantly enhance the consumer protection framework. This will benefit consumers by removing the loyalty penalty for consumers of long tenure while preserving competition in the market.
“The publication of these measures does not bring to a close our consumer protection work in the insurance sector. We will continue to engage with insurance providers to ensure work in relation to oversight of pricing practices is undertaken.
“We will monitor developments in the private motor and home insurance markets to better understand customer engagement in the market and how it might be improved and to ensure that firms are acting in the best interest of consumers and delivering fair outcomes.”
Seán Fleming, minister of state with responsibility for financial services, credit unions and insurance, said: “I welcome the Central Bank’s new regulations to ban the practice of price walking in the home and motor insurance markets, making Ireland the first European Union member state to do so.
“This will deliver a fairer approach to how motor and home insurance policies are priced. The ban is pro-consumer and was a key element of the Government’s action plan for insurance reform.
“I will soon publish the Insurance (Miscellaneous Provisions) Bill 2022, which will require the Central Bank to publish data on how these changes are being passed on to consumers.”