Dáil Éireann Debate, Tuesday - 25 July 2023
325. Deputy Brendan Smith asked the Minister for Finance if he has had recent contact with insurance companies regarding the widespread concerns of homeowners in relation to the escalating costs of home insurance premiums; and if he will make a statement on the matter. [36978/23]
View answerI am aware that the cost of home insurance may be rising for some consumers. As the Deputy will appreciate, neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).
Notwithstanding this, my officials engage regularly with Insurance Ireland on a range of consumer issues, including the cost of home insurance. According to Insurance Ireland, costs for building materials, energy, labour costs and other operational costs are increasing, due to inflation. Insurance Ireland has advised that these factors have an impact on the overall cost of rebuilds, repairs, and replacement claims, which is reflected in home insurance premiums (although costs of repairs and materials are only some of the factors in the assessment of risk and calculation of premiums).
In this regard, I note that the latest CSO Wholesale Price Index for June 2023 illustrates that the cost of building and construction ‘materials’ was 35.8 per cent higher compared to January 2021. As construction costs generally increase, rising rebuild and repair costs can be expected to impact upon home insurance premiums. According to the CSO Consumer Price Index for June 2023, the price of ‘insurance connected with the dwelling’ rose by 21.5 per cent in the year, and was 19.8 per cent higher than in January 2021, although it did reduce slightly month-on-month.
The Government is keenly aware of the impact that insurance costs can have on many groups – including homeowners - and has therefore prioritised reform of this sector via the whole-of-Government insurance reform agenda. As part of her ongoing engagement with the industry, Minister of State Carroll MacNeill will be meeting with the CEOs of the main insurers in the Irish market again in the autumn. I understand that the cost of home insurance will be a key issue raised at those meetings.
With respect to home insurance, a significant Action Plan deliverable has been the Central Bank’s ban on price walking, which will protect customers who prefer to stay with their current home insurer from being subject to an unfair ‘loyalty penalty’.
Significantly, the design of the price walking ban means that consumers can still benefit from ‘new business’ discounts by changing insurer. It is therefore important for policyholders to compare with other providers to ascertain if they can get a better consumer-focused deal by switching.
Insurance Ireland has detailed advice around home insurance and the benefits of shopping around on its consumer website, www.understandinginsurance.ie. This website also contains information on what affects insurance quotes and the factors impacting premiums, including calculation of rebuilding costs and the effect of inflation, which may be useful to consumers.
