Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I thank the Deputy for her constructive comments. I acknowledge the role of her party colleague, Deputy Doherty, in dealing with this topic over a period of time.

We had complicated issues with price walking and dual pricing, and they were connected issues but subtly different in their own way. What is happening here is that we are dealing with this issue as part of the programme for Government and the action plan for insurance across all Departments. To put the insurance plan in context, the relevant committee is chaired by the Tánaiste, so the Department of Enterprise, Trade and Employment is involved, as is the Minister for Finance, Deputy Donohoe, and I am also involved from the Department of Finance because insurance is a regulated industry. The committee also involves the Minister for Public Expenditure and Reform, the Minister for Children, Equality, Disability, Integration and Youth and, in particular, the Minister for Justice because much of the legislation comes from the Department of Justice with regard to insurance. It is a whole-of-government approach.

In dealing with the action plan for insurance, all the bodies I have mentioned have different roles on different aspects, different legislation comes from the Department of Justice, and State agencies like the Central Bank have a key role in implementing some of the measures. The Department of Finance has put forward this Bill and we also helped bring forward legislation on the personal injuries guidelines six months earlier than had originally been envisaged. Right across that committee, different sections of the State are doing different operations.

In this section, what we have is an acknowledgement that the Central Bank has agreed to implement this from 1 July for dual pricing only. That is in regard to motor policies, whereby people should get a price equivalent to that of a new customer. We have had what we call the loyalty penalty, whereby people who are with an insurance company and never seek to move to another company may well have been paying too much for not doing that. After nine years, they would be paying a penalty of about 12% or 14%. The issue in the house insurance market is even more serious and, after nine years, some people are paying up to 34% over and above what they would be paying if they were a new customer going into the same insurance company to insure the same house for the same value.

That is extraordinary but understandable. Just around Leinster House, I have asked people which company their house insurance is with and they reply that they got their house insurance when they took out their mortgage, and they are not exactly sure. Very few people query their house insurance because it just goes through as part of the mortgage payment. For that reason, I think insurance companies have abused the situation and loyal customers, and they were adding a small percentage, year by year, knowing people would never check it. I encourage people to find out which company their house insurance is with in the first place, and to make sure they make the phone call at the next renewal date.

From 1 July, this practice is going to be outlawed by the Central Bank. The amendment in this section arises because the Department of Finance has insisted that the Central Bank will not just do it, because it will do it, but that it will produce a report within a set timeframe of one year after the coming into being of the Act, or as quickly as possible thereafter. I am sure that report will be published by the Central Bank directly as well. We have asked for some interim information after a six-month period to see the effect of this change. There is no point in something happening if we do not have the evidence to track it. Our role here is to make sure there is a reporting mechanism back into the system. This practice has been ongoing for ages and it is now coming to an end. We want the evidence and the proof that it is coming to an end. That is why we have this section to make sure there is a clear report from the Central Bank in regard to those areas.

We are the first country in the EU to introduce this price walking ban. Other countries in the EU have been talking about it and England has commenced a similar but slightly different approach, but we are the first country in the EU to introduce this. This is to ensure the Central Bank comes back to us next year with the hard information and then, like everything else, when we get the information, we will be in a position to take whatever policy decisions are required. I expect that, given the fact the Central Bank is outlawing the practice straightaway from 1 July, we will see reductions in those cases for loyal, long-standing customers.