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Insurance Industry

Dáil Éireann Debate, Tuesday - 9 November 2021

Tuesday, 9 November 2021

Questions (86, 99)

John Lahart

Question:

86. Deputy John Lahart asked the Minister for Finance the plans he has to address the process of price walking in insurance; and if he will make a statement on the matter. [54353/21]

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Cormac Devlin

Question:

99. Deputy Cormac Devlin asked the Minister for Finance the action he is taking to address differential pricing in which insurance customers are charged higher premiums relative to the expected costs the longer they remain with a provider; and if he will make a statement on the matter. [54362/21]

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Written answers

I propose to take Questions Nos. 86 and 99 together.

Price walking is a form of differential pricing where consumers are gradually charged higher premiums, relative to the cost of providing the service, the longer they remain with a provider. This represents a de facto loyalty penalty on long-serving customers. In the context of this specific question this is an important issue for consumers of insurance services, and the Government’s Action Plan for Insurance Reform sets out a number of actions to address it.

The Central Bank’s Review of Differential Pricing in the Motor and Home Insurance Markets, is an important element of this and I am pleased that it published its Final Report and Public Consultation last July – some two months ahead of schedule. The Report showed that the majority of motor and home insurance firms apply some form of differential pricing and that some of the pricing practices identified, including price walking, could result in unfair outcomes for some consumers. Accordingly, the Central Bank has made a number of proposals, including to ban price walking in the motor and home insurance markets for personal customers.

These proposals represent a balanced approach that will protect customers who prefer to stay with their current insurer, while still allowing those who prefer to switch provider to receive discounts for doing so. As I have consistently stated on this issue, it is important to protect the ability of consumers to get a good deal, and to ensure that any proposals are tailored to the Irish market. I believe the proposed ban achieves this, and recognises that price-sensitive Irish customers value promotions for shopping around. This considered approach will also help facilitate any new market entrants who wish to offer discounts to attract business.

Following its public consultation, the Central Bank intends to finalise its proposals and to introduce them from July next year. The Department of Finance has been examining the Bank’s Final Report and considering ways to support this work. In order to ensure timely oversight of any new measures, the Insurance (Miscellaneous Provisions) Bill will therefore require the Central Bank to report to the Minister for Finance about any steps taken to address price walking, and whether any further action may be needed.

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