Dáil Éireann Debate, Tuesday - 25 January 2022
229. Deputy Pearse Doherty asked the Minister for Finance if he or his Department made a submission to the Central Bank public consultation regarding its proposals with regard to differential pricing in the motor and home insurance markets. [2879/22]
View answerThe Government’s Action Plan for Insurance Reform includes a commitment to work to remove dual pricing from the insurance market. As the Deputy is aware, the Central Bank completed its Review and published its final report into differential pricing, along with a public consultation on proposals to strengthen the consumer protection framework, in July 2021.
Among the Central Bank’s proposals is a ban on “price walking” in the motor and home insurance markets for personal consumers. Price walking, or a “loyalty penalty”, occurs when consumers are charged higher premiums, relative to the expected cost, the longer they remain with an insurance provider. The Central Bank has proposed that its new measures would come into force on 1 July 2022.
The public consultation on the proposals ran until 22 October 2021, and the process was independently managed by the Central Bank. As is the usual practise, neither my Department nor I made a formal submission to the consultation, but the Central Bank kept the Department updated on developments. However, Government's pro-consumer policy on this matter is well known and has been articulated to the Bank on a number of occasions.
I welcome this proposal, and believe it represents a balanced approach that will protect customers who wish to remain with their current insurer, while still allowing those who prefer to shop around to receive discounts from new providers for doing so.
The Central Bank has indicated it has the necessary powers to implement its proposals, including banning price walking. The Government is keen to ensure that this is effective. That is why, in the Insurance (Miscellaneous Provisions) Bill , we have proposed a requirement for the Bank to provide a report on whatever it ultimately decides to implement to facilitate a timely assessment, thereby allowing the Government to act swiftly if further action is needed in order to protect consumers from any unfair loyalty penalty.
