Bank insurance

Mixed reaction to the central bank’s insurance proposal

The Central Bank’s proposal to ban home and auto insurance companies from imposing loyalty penalties on long-time customers met with a mixed response from parties lining up to have their say at the time. that the plan goes through a consultation process in the coming months.

Sinn Féin finance spokesman Pearse Doherty TD, who filed a complaint with the Central Bank in late 2019 over the issue of differential pricing and introduced a bill on the issue to the Dáil earlier this year, said the regulator’s decision represents a “victory for consumers”.

“We must now act to implement the proposals as soon as possible and put an end to the insurance industry and its questionable practices,” Doherty said. “Until the changes take effect next year, I would encourage consumers to shop around for the best possible quote and not just accept the quote given to them when renewing their existing policy. . “

The regulator said on Wednesday it was proposing to ban what is known as the price march, where customers are charged higher premiums over expected costs the longer they stay with an insurer. He estimates that customers who stay with the same auto insurer for nine years or more pay 14% more than a driver with a similar risk profile renewing for the first time. The difference on home insurance premiums is on average 32%, he said.

Interested parties have until October 22 to file comments with the Central Bank on the plan. The regulator aims to put in place a new regime by July 1 of next year.

Cathie Shannon, director of general insurance at Brokers Ireland, which represents 1,225 brokerage firms, said the agency was disappointed that the Central Bank had not followed the UK in effectively banning providers offering discounts below costs to attract new customers, or what is known as double pricing.

“Insurance companies should never lose sight of the fair value they should deliver to consumers and the fact is that differential pricing harms the relationship of trust the industry should be known for,” he said. she declared.

Prices and fees

Consumer activist and founder of askaboutmoney.com Brendan Burgess also said the proposals don’t go far enough. “There is no good reason why insurance companies should be allowed to charge new customers a lower price than they charge existing customers,” he said. “Prices should reflect costs. New customers are more expensive than existing customers because there are set-up costs, such as commissions. “

Insurance Ireland said the proposals were “balanced and proportionate” and that it would engage “constructively” with the Central Bank during the consultation period.

“The report reveals that differential pricing benefits some consumers who are engaged and seek their insurance to get the best price for their needs,” said Moyagh Murdock, general manager of the industry lobby. “However, for other consumers who are not actively engaged in shopping, this practice can come at a cost.”

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