Sinn Féin spokesperson on Finance, Pearse Doherty TD, has welcomed today’s Central Bank review of the regulations to ban price discrimination in the insurance market, which took effect on 1 July 2022.

This ban followed years of campaigning by Teachta Doherty to end this price gouging practice by the insurance industry.

Speaking today, the Donegal TD said:

“I welcome today’s report by the Central Bank on the regulations to ban price discrimination in the insurance market, which took effect effect on 1 July 2022.

“This price gouging practice involves insurance companies identifying loyal and vulnerable customers and then charging them artificially high prices at renewal.

“In 2021 the Central Bank found that 2.5 million policyholders were paying a combined €187 million more than the actual cost of their policies as a result of this practice.

“For many years I campaigned to end this price gouging practice and put money back in consumers’ pockets – submitting a complaint to the Central Bank in October 2019 calling for this practice to be banned before introducing legislation to ban it in January 2021.

“It is clear that the Central Bank responded and acted on that complaint.

“Today the Central Bank’s report has found that this ban has resulted in fairer pricing for consumers, with loyal customers now facing lower premiums whenever they renew.

“I am pleased that Sinn Féin’s long campaign to ban this practice and deliver fairer pricing for consumers is now having a positive effect.

“These regulations must now kept under constant review to ensure that insurers are following the regulations to the letter.

“It is clear that insurers are still not passing on the full savings they’re making to their customers as a result of the significant fall in claim numbers and costs.

“Moving forward, my focus will be on ensuring that customers see the full benefits of these reduced claims costs, and I will be progressing my Judicial Council (Amendment) Bill to do just that in the New Year.”

Note to editor:

You can read the review in full here.

MAIN FINDINGS

To ensure that consumers were not being unfairly treated, we introduced the Regulations to ban price walking from the date of subsequent renewal. The Regulations prohibit insurance providers from setting a subsequent renewal price for private car or home insurance that is higher than the equivalent year one renewal price.

The Central Bank’s ban on price walking means that, from 1 July 2022, insurance providers cannot charge consumers, who are on their second or subsequent renewal, a premium higher than they would charge an equivalent year one renewal consumer at that point in time. This means that at any given time, at the point of renewal for policyholders, they cannot be penalised for their loyalty when comparing them to an equivalent year one renewal consumer.

We can see that renewing consumers are paying less at subsequent renewals for their home insurance than they would if they were renewing for the first time (ratio < 1 for all tenures). This shows that all in-scope insurance providers are adhering to the Regulations and home insurance customers are no longer being charged higher premiums as a result of their loyalty.

Similar to the home market, renewing consumers are paying less at subsequent renewals for their motor insurance than they would if they were renewing for the first time (ratio < 1 for all tenures). This shows that all in-scope insurance providers are adhering to the Regulations and consumers of motor insurance are no longer being charged higher premiums as a result of their loyalty.

In the home insurance market, the APTP ratio was significantly greater at longer tenures than shorter tenures prior to the Regulations. Following the implementation of the Regulations, the difference between the APTP for Tenure 1 and Tenure 9+ has reduced significantly from 33% to 9%.

In the private car insurance market, the APTP ratio was significantly greater at longer tenures than shorter tenures prior to the Regulations. Following the review and implementation of the Regulations, the difference between the APTP for Tenure 1 and Tenure 9+ has reduced significantly from 16% to 1%.