Plans to stop Irish motor insurers penalising loyal customers will work, says regulator

The Central Bank has moved to stop the longstanding practice of insurers in Ireland offering discounts to attract new customers at the huge expense of their existing customers, who effectively are made pay for their loyalty

The row over price-walking or dual pricing led to a review by the Central Bank this summer and it has moved to regulate, but not ban, insurers offering year-one discounts altogether. 

Plans to outlaw abuses by insurers discriminating against loyal customers will work, and the industry will be held to account over its trust issues with consumers, the Central Bank has told the Oireachtas Finance Committee. 

The regulator has moved to stop the longstanding practice of insurers in Ireland offering discounts to attract new customers at the huge expense of their existing customers, who effectively are made pay for their loyalty. 

The row over price-walking or dual pricing led to a review by the Central Bank this summer and it has moved to regulate, but not ban, insurers offering year-one discounts altogether.    

A similar row broke out in Britain, where the Financial Conduct Authority (FCA) in the coming weeks plans to crack down on the practices but using a different approach. 

Gerry Cross, director of financial regulation of policy and risk at the Central Bank, said there was "no room" for unfair practices by insurers in the way they treat consumers but it would allow insurers to keep incentives to attract new customers.

It will further insist the industry needs to be "trustworthy" by insisting the boards of the insurers will be made responsible that they prioritise the interests of customers. 

The Central Bank believes it is key that customers purchasing insurance policies are not misled to buy policies through incentives, Mr Cross said. 

However, it will be made "very clear" to customers the size of the discount and the likely cost when the discount period ends, he added.  

Sinn Féin finance spokesperson Pearse Doherty said the FCA was going about regulation differently by banning discounts altogether in the coming weeks, because most customers of motor and house insurance renew their premiums automatically. 

Reviewing the regulator's actions this year, Mr Cross said the National Claims Information Database has given the Central Bank a better understanding of the cost of claims and the costs of premiums for insurers. 

Covid business interruption

He said the regulator had been "proactive" over the issue of business interruption insurance during the Covid crisis by making clear that ambiguously-written policies should be settled in favour of customers. 

So far, €146m in business interruption claims have been settled and it is satisfied that the settlement of remaining claims was underway, the regulator said.   

Mr Cross said ambiguity of policies would form part of its review of consumer code.

Separately, the Alliance for Insurance Reform has said moves pledged by the Government affecting businesses facing accident claims over so-called "duty of care" has been far too slow. 

Peter Boland of the campaigning group said the Government needed to catch up and "deliver on its promise to rebalance the duty of care in light of an alarming loss of momentum on the issue in recent months". No new details have been published, Mr Boland said. 

Businesses such as creches and play centres have complained they "are found liable for accidents they had no hand, act or part in, because the courts and insurers impose an absolute duty of care on them, ignoring the role played by the injured party themselves", he said.