The new law will come into effect from 1 July 2022 and exclude new customer discounts
The Central Bank of Ireland, which acts as the country’s financial regulator, has introduced a ban on price walking in its motor and home insurance market that will apply to insurance undertakings and insurance intermediaries from 1 July 2022.
Under the act insurance providers cannot charge renewing customers a premium that is higher than they would have charged a renewing year one customer.
New customer discounts, however, will be permitted to support switching and competition.
The new law was published yesterday (16 March 2022) in the Central Bank (Supervision and Enforcement) Act 2013 Section 48(1) (Insurance Requirements) Regulations 2022.
Firms will also be required to carry out annual reviews of motor and home insurance pricing policies and processes and ensure that information is provided to consumers in advance of automatic renewal – including the right to cancellation.
Ireland’s move accompanies the FCA’s clamp down on price walking in the UK last year (May 2021) and follows the country’s Central Bank identifying differential pricing as a growing consumer risk in its annual consumer sectorial risk assessment process.
The bank then went on to publish its final report and public consultation on the Review of Differential Pricing in the Private Motor and Home Insurance Markets in July 2021, which included proposals for new regulations.
The Central Bank of Ireland’s director general Derville Rowland said: “We have consistently stated that we will intervene where we have reason to believe that unfair practices are occurring that take advantage of consumer behaviours and habits and we will prioritise the interests of consumers over the behaviours and conduct in firms.
“The publication of these measures does not bring to a close our consumer protection work in the insurance sector.
“We will continue to engage with insurance providers to ensure work in relation to oversight of pricing practices is undertaken.”
Rowland further stated that by monitoring developments and continuing to work with the insurance industry, the bank would be able to ensure that firms are “acting in the best interest of consumers and delivering fair outcomes”.