Car insurance Ireland: No more ‘price walking’ by car and home insurers as ban comes into force tomorrow

A ban on insurance companies punishing loyal customers with higher renewal fees is set to come into effect tomorrow.

The move would not prevent new customers from getting discounts, but would ensure the market was fairer, the central bank said.

The ban involves what is called price walking, where customers are charged more each year they stay with the same insurer, instead of being rewarded.

The Irish Independent has consistently highlighted the dubious practice for years.

In March, the Central Bank issued regulations prohibiting this practice in the home insurance and car coverage markets.

Also known as dual pricing, it involves insurers using algorithms and other big data techniques to identify vulnerable customers who are unlikely to shop at renewal.

Insurers then send them higher renewal quotes than is justified by the cost of insurance coverage.

It is a practice that particularly affects the elderly in this country.

Reports compiled by the Central Bank have revealed that those who stay with the same home insurer can pay up to €161 more per year for cover than a new customer.

Motorists loyal to the same operator can pay up to €112 more for cover after nine years of loyalty.

Even greater price discrimination was seen by Sinn Féin finance spokesman Pearse Doherty, who has done extensive work to expose the corrosive impact of the price march on insurance prices.

The Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022 will apply to insurance providers and brokers from 1 July.

From that date, insurers will no longer be allowed to charge renewing customers a higher premium than they would have charged a one-year equivalent consumer renewing their policy.

However, to support competition and change, discounts for new customers will be allowed.

Insurers and brokers will be required to conduct an annual review of home and auto insurance pricing policies and processes to ensure fair practices.

The regulation also specifies the information that must now be provided to consumers prior to the automatic renewal of an insurance policy, including the right of termination.

The changes come despite the fact that insurance companies have in the past told the Oireachtas finance committee that they do not engage in dual pricing or price walking.

However, research conducted by the regulator found that price walking is common.

“Our analysis shows that price marching is common in auto and home insurance markets,” a Central Bank report said.

Sinn Féin’s Mr Doherty, who has campaigned on the issue for years, welcomed the ban.

“For years, insurance companies have abused their customers’ prices through a practice known as double pricing or price walking,” he said.

“This is a win for consumers and should drive insurance prices down in the months and years to come.”

But Mr Doherty said he was concerned about loopholes in the new rules that the insurance industry could use to effectively avoid the ban, especially for first-time renewing customers.

“So we need to keep the rules of this ban under review to make sure customers see the benefits in their pockets,” he said.

Asked recently why it took so long for the Central Bank to ban the price march, Chief Financial Conduct Officer Derville Rowland denied that the regulator had delayed dealing with the issue.

“I just disagree that we were kicked and shouted into this, or that there was a delay,” she said.

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Justin D. O'Neill