Minister Carroll MacNeill welcomes the Central Bank’s Review of Differential Pricing Regulations

Jennifer Carroll MacNeill, the Minister for Financial Services, Credit Unions and Insurance, has welcomed the Central Bank’s ‘Review of Differential Pricing Regulations in the Private Car and Home Insurance Markets’.

Minister Carroll MacNeill said of 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. This practice was known as price walking and resulted in unfairly higher premiums in some cases.

"Ireland was the first EU Member State to introduce a price walking ban in 2022. It was specifically designed for the Irish market so that consumers could continue to benefit from being able to get a better-priced premium by switching insurers.

"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.

"I am pleased to see the Central Bank will also consult on possible further measures regarding automatic insurance renewal. This work will help strengthen the Consumer Protection Code and ensure we have robust rules to protect consumers in a constantly evolving financial services landscape."

Notes

On 1 July 2022, the Central Bank imposed new requirements on insurance undertakings and insurance intermediaries to strengthen the consumer protection framework – the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022 (‘the Regulations’).

This followed the Bank's 2021 review of differential pricing in the home and motor insurance markets, which concluded that the practice of price walking could result in unfair outcomes for some consumers. 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 Regulations introduced a ban on price walking in motor and home insurance, meaning insurance undertakings and insurance intermediaries cannot charge consumers, who are on their second or subsequent renewal, a premium higher than they would charge an equivalent year one renewal consumer. In addition, the Regulations require providers to review their pricing policies and processes annually, and to give consumers additional information in advance of renewal for all non-life insurance policies that renew automatically, to help them make more informed decisions.

Section 6 of the Insurance (Miscellaneous Provisions) Act 2022 requires the Central Bank to prepare and submit a report to the Minister for Finance within 6 months of the first anniversary of commencement (i.e. 18 months) setting out:

a) the opinions of the Bank in relation to insurers’ oversight of pricing practices;

b) measures implemented by the Bank in relation to the practice of price walking;

c) measures implemented by the Bank in respect of automatic renewals of non-life insurance products; and

d) the Bank’s conclusions as to whether further measures are required in relation to any of these matters.

As set out in this report – Review of Differential Pricing Regulations in the Private Car and Home Insurance Markets – the Central Bank is satisfied that the Regulations are working effectively, have not caused any unintended consequences, and (in particular) have addressed the loyalty penalty in pricing in the home and motor markets. The Central Bank is satisfied that no further measures are required at this time, and plans to consult on possible further measures on automatic renewal in the forthcoming Consumer Protection Code Review Consultation Paper.

The Central Bank’s report will now be laid before the Oireachtas.