Jackie Cahill
Question:39. Deputy Jackie Cahill asked the Minister for Finance his views on the impact the ban on price walking will have on insurance premiums. [9440/22]
View answerTuesday, 22 February 2022
Questions (39)
Written answers
In line with commitments in the Programme for Government, the Action Plan for Insurance Reform contains a number of actions that aim to lower insurance costs for consumers. In this regard, under the Action Plan, my Department was tasked with examining the Central Bank’s Review of Differential Pricing in the Motor and Home Insurance Markets and taking any appropriate actions as deemed necessary in light of the Bank’s final report.
As the Deputy is aware, the Central Bank published its final report, along with a public consultation on proposals to strengthen the consumer protection framework in July 2021. Among the Bank’s proposals is a ban on “price walking” in the motor and home insurance markets for personal consumers. Price walking is a form of differential pricing whereby consumers are charged higher premiums, relative to the expected cost, the longer they remain with an insurance provider. As such, it represents a de facto “loyalty penalty” on long-serving customers, with the Bank’s findings showing that the premiums paid by certain policyholders deviate significantly from the expected costs to the insurer.
I therefore welcome the proposal to ban this practice, as I believe it will protect those customers who prefer to stay with their current insurer from being unfairly penalised for doing so in terms of the premium paid. As set out in its final report, I understand that the Bank’s intention is to apply this ban on price walking from the point of second renewal, meaning that consumers who wish to switch provider would still be able to benefit from discounts for new business customers. As such, I believe it represents a balanced approach that is well-calibrated to the Irish market and the preference of consumers here.
In summary, I believe that the proposed ban on price walking is a very significant development which would ensure fairness and further strengthen protections for consumers in the motor and home insurance markets. In order to ensure that this is the case, my Department is currently advancing legislation which would require the Bank to report on the impact of this ban, or any other measures taken to target price walking, within 18 months of the measure coming into effect. This would provide timely oversight, thereby allowing the Government to act swiftly if further intervention is needed in order to protect consumers from any unfair loyalty penalty.