Seán Fleming TD, Minister of State at the Department of Finance with special responsibility for Financial Services, Credit Unions and Insurance welcomes the passage of the Insurance (Miscellaneous Provisions) Bill 2022 through the Oireachtas. The Bill is being sent to President Michael D. Higgins for signature.
On July 1st 2022, the practice of overcharging loyal customers known as ‘price walking’ or the ‘loyalty penalty’ will end. This will have a positive impact on many thousands of car and home owners.
Central Bank research shows customers who have stayed with their insurance provider for nine years or more, are paying, on average, 14% more for private car insurance and 32% more on home insurance. There are currently 2.2 million private motor and 1.3 million home insurance policy holders around the country.
Ireland is the first country in the European Union to ban the practice of ‘price walking’. This will mean insurance companies can still offer discounts while also stopping the ‘loyalty penalty’. This Bill will make the Central Bank report on the bans effectiveness within 18 months of its enactment.
The Insurance (Miscellaneous Provisions) Bill 2022 will also:
- Allow the Central Bank to collect data on insurance companies deducting state supports from claim settlements.
- Put a new requirement on insurance companies to tell people of any deductions of state supports from their insurance claim settlements.
Welcoming its completion, the Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming, said:
“The passage of this Bill through the Oireachtas is timely. The price walking ban is coming into effect on July 1st. This may deliver insurance premium reductions for many motor and home owners who have not switched providers over the years. This is good news for hard pressed consumers. This Bill means the Central Bank will be required to report to the Government on the bans effectiveness. Following this report, the Government will then examine whether further action is required.”
“Significantly, the Government will have enhanced transparency over what state supports insurance companies are deducting from claim payouts. This will put the Government in a better place to consider any future policy intervention to protect taxpayer money.”
Summary of the Insurance (Miscellaneous Provisions) Bill
The Insurance (Miscellaneous Provisions) Bill 2022 seeks to address several insurance-related issues that have come to light since the Action Plan for Insurance Reform was published in December 2020, including the practice of insurers deducting State support payments from COVID-19-related claim settlements. In this regard, the Bill introduces a new requirement for insurers to inform consumers of any State supports they deduct from claim settlements, and furthermore enables the Central Bank of Ireland to collect data on such deductions through the National Claims Information Database (NCID). This will enhance transparency around this issue and help to better-inform policymakers to address it in future situations.
The Bill also creates a new requirement on the Central Bank of Ireland to report to the Minister for Finance about any steps it takes to address the practice of ‘price walking’, following the Bank’s Review of Differential Pricing in the Private Car and Home Insurance Markets, and subsequent Regulations to ban 'price walking’ from July 2022. In addition, the Bill provides for technical amendments to the Consumer Insurance Contracts Act 2019 in order to clarify certain issues that arose following the enactment of this legislation. Also in the interests of Irish consumer protection, it amends the legislation underpinning the Temporary Run-off Regime for UK and Gibraltar-based insurers, which was established following the UK’s withdrawal from the EU, to rectify technical issues with the scheme that have been identified by the Central Bank of Ireland.
The Bill will provide for the following:
- a) Amendments to the Central Bank (National Claims Information Database) Act 2018 to enable the Central Bank of Ireland to collect data through the National Claims Information Database (NCID) on any deductions from claim settlements by insurers that relate to public moneys (i.e. State supports);
- b) A new requirement on the Central Bank of Ireland to submit a report to the Minister for Finance setting out the steps it has taken since regulating the practice of ‘price walking’. ‘Price walking’, also known as a ‘loyalty penalty’, is a form of differential pricing where customers are charged higher premiums relative to the expected costs the longer they remain with an insurance provider. The Bill will provide for this report to be submitted within an 18-month timeframe from enactment of this section, and to be laid before the Houses of the Oireachtas upon receipt;
- c) A new requirement on insurers, under the Consumer Insurance Contracts Act 2019, to disclose to consumers any deductions of public moneys from insurance claim settlements (with the exception of those made under the Recovery of Benefits and Assistance Scheme operated by the Department of Social Protection);
- d) Amendments to the Consumer Insurance Contracts Act 2019 in order to address technical and legal issues that arose following the initial enactment of this legislation. These will provide clarity and ensure that the objective of the Act is achieved;
- e) To protect existing Irish policyholders, amendments to the European Union (Insurance and Reinsurance) Regulations 2015 to address issues identified by the Central Bank of Ireland with the Temporary Run-off Regime (TRR) for UK and Gibraltar-based insurers. The TRR was established in light of the UK’s departure from the EU, after which these insurers lost the ability to write new business in EU Member States. These amendments will provide for technical changes in order to ensure that certain insurance firms that provide reinsurance, and firms in liquidation, can use the TRR to run-off their existing Irish insurance contracts.