Legislation introduced last year to tackle “price walking” by car and home insurers is working effectively and has addressed issues around insurers penalising customer loyalty, according to a Central Bank review.
In 2021 the Central Bank conducted a review of differential pricing in the State’s home and private car insurance markets, relating to how customers with similar risk and costs of service were being charged different premiums.
The Central Bank found that the practice of “price walking”, where customers were charged a higher premium the longer they were with an insurer for no other reason than sticking with the same provider, was particularly evident in the Irish market.
The review also found that insurer oversight of pricing practices was lacking, and automatic renewal processes for policies lacked transparency.
New regulations which came into effect in July of last year (the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022) sought to address these issues, with measures including a ban on price walking.
In a review published this week, the Central Bank said it is “satisfied that the regulations are working effectively”.
The Central Bank noted that consumers who stick with their existing provider for their second or subsequent renewal no longer pay a “loyalty penalty”, and insurance providers continue to offer new business discounts enabling customers to shop around and get a better priced premium through switching.
The review also found that insurers have more robust oversight processes relating to pricing, and have introduced required disclosures to help customers to make more informed decisions around automatic renewal.
Jennifer Carroll MacNeill, Minister for State with responsibility for insurance, welcomed the review.
“It was never right that motorists or homeowners, who were on their second or subsequent premium renewal, could be charged a higher premium by insurers than someone else on an equivalent year one renewal,” she said.
“The Central Bank’s review today shows that the price walking ban is working. It’s much better now as we’re not subject to some of the unfair practices previously in place. It means everyone can continue to look around for a better insurance deal at renewal time,” she added.
The Central Bank said it is satisfied that no further measures are required regarding price walking, but said it plans to consult on possible further measures regarding automatic renewal in the forthcoming Consumer Protection Code Review Consultation Paper.
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Find The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
