Ministers Donohoe and Fleming secure agreement to draft the Insurance (Miscellaneous Provisions) Bill

Bill aims to address a number of insurance-related issues that have arisen since publication of the Action Plan for Insurance Reform.

The Minister for Finance, Paschal Donohoe TD, and the Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming TD, have received agreement from the Cabinet to commence drafting the Insurance (Miscellaneous Provisions) Bill.

Welcoming the Government’s approval, Minister Donohoe said:

“I am pleased that the Cabinet has approved the drafting of the Insurance (Miscellaneous Provisions) Bill. Its provisions will further the Government’s reform agenda and increase transparency in the insurance market. Significant progress has been made to date through the Action Plan for Insurance Reform, including the introduction of the Personal Injuries Guidelines earlier this year and the expansion of the National Claims Information Database to track Employer and Public Liability claims. I believe the Bill will serve to further advance this reform agenda and continue this important work, in line with the Government’s ongoing commitment to prioritise reform of the insurance sector in the interests of consumers, businesses, and voluntary groups”.

The Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming TD, said:

“The practice of applying a loyalty penalty to long-standing customers, known as price walking, will be banned next year. This Bill will protect motorists and homeowners from this practice in the insurance industry. This Bill will facilitate the Central Bank publishing data on how changes and savings for motorists and homeowners are being enforced.”

“This Bill will also introduce enhancements to the National Claims Information Database (NCID) to collect data on the deduction of taxpayer supports to businesses by insurance companies from compensation payouts. This will allow the Central Bank to collect and publish this information. This will provide greater transparency and understanding of the prevalence of this practice by insurers. This in turn will ensure taxpayer interests are protected in the future. In addition, it also provides that consumers who have deductions from the value of their compensation are informed of this and explained as to why”.

ENDS

General Scheme - Insurance (Miscellaneous Provisions) Bill

Íoslódáil

Amharc

Regulatory Impact Analysis - Insurance (Miscellaneous Provisions) Bill

Íoslódáil

Amharc

Note for Editors

Summary of the Insurance (Miscellaneous Provisions) Bill:

The General Scheme of the Insurance (Miscellaneous Provisions) Bill 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 Government payments from COVID-19-related claims settlements. In this regard, the Bill introduces a new requirement for insurers to inform consumers of any State supports they deduct from claims payments, and furthermore enables the Central Bank to collect data on such deductions through the National Claims Information Database. 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 – the Final Report of which was published in July this year. 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. It also 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. This is in the interests of consumer protection in here in Ireland.

In this regard, 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 compensation payments by insurers that relate to public moneys (i.e. State supports), with the exception of those made under the Social Welfare and Pensions Act 2013;

b) A new requirement on the Central Bank of Ireland to submit a report to the Minister for Finance setting out the steps (if any) it has taken to regulate the practice of price walking, and its views on whether further action is required. Price walking, also known as the ‘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, and to be laid before the Houses of the Oireachtas upon receipt;

c) 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, and will allow for an outstanding section to be commenced;

d) A new requirement on insurers, under the Consumer Insurance Contracts Act 2019, to disclose to consumers any deductions of public moneys from insurance claims settlement amounts (with the exception of those made under the Social Welfare and Pensions Act 2013);

e) Amendments to the European Union (Insurance and Reinsurance) Regulations 2015 to address issues identified by the Central Bank 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 who provide reinsurance, and firms in liquidation, can use the TRR to run-off their existing Irish insurance contracts.

Next steps

The Minister of State with responsibility for Financial Services, Credit Unions and Insurance will write to the Chair of the Committee on Finance, Public Expenditure and Reform and the Taoiseach regarding pre-legislative scrutiny. Officials will engage with the Office of the Parliamentary Counsel to the Government to begin drafting the legislation on the basis of the General Scheme published today.