Central Bank implements new Insurance Regulations

• Ban on price walking in motor and home insurance comes into effect on 1 July 2022.
• New customer discounts not affected.
• For automatic renewals, better information and reminders to be provided to encourage switching.

The Central Bank of Ireland has today published the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022 which will apply to insurance undertakings and insurance intermediaries from 1 July 2022.

The Central Bank identified differential pricing as a growing consumer risk in its annual consumer Sectoral Risk Assessment process. As a result, it undertook a comprehensive review to assess how differential pricing is used in the motor and home insurance markets in Ireland and its impact on consumers. The principal conclusion from this review was that the practice of price walking could result in unfair outcomes for some consumers in the motor and home insurance markets. The Central Bank published the Final Report and Public Consultation on the Review of Differential Pricing in the Private Motor and Home Insurance Markets in July 2021 (PDF 1.09MB), which included proposals for new Regulations to address the findings in the areas of pricing practices, annual review and record keeping, and automatic renewals.

A ban on price walking in insurance in the motor and home insurance market will come into effect from 1 July 2022. This means that, from 1 July, insurance providers cannot 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 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. This is another measure to encourage consumers to consider the potential benefits of switching and to increase consumer awareness of the options available to them at renewal time.

Director General, Derville Rowland 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.”

Notes
These Regulations are issued under section 48 of the Central Bank (Supervision and Enforcement) Act 2013 (No. 26 of 2013).

Further information on the Central Bank’s Review of Differential Pricing is available on our website.