Written answers

Thursday, 19 January 2023

Photo of Louise O'ReillyLouise O'Reilly (Dublin Fingal, Sinn Fein)
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205. To ask the Minister for Finance the responsibility a banking institution has in relaying to a customer that their mortgage-required home insurance premium is due to increase; and if he will make a statement on the matter. [2508/23]

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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The responsibility for providing renewal information to a consumer on a house insurance policy lies with the insurer under the Consumer Insurance Contracts Act 2019. The insurer shall, within a reasonable time before renewal of a contract of insurance (and in any event no later than 20 working days before renewal), notify the consumer on paper or on another durable medium of any alteration to the terms and conditions of the policy, using plain intelligible language in doing so.

Regarding home insurance, in September 2022 the Central Bank completed a review of the risk of under-insurance in the home insurance market. The Review was undertaken because consumers are currently facing increasing rebuild costs, which affects the level of insurance cover that a consumer should have on their property. The review found that under-insurance in the home insurance market has been steadily increasing over the last 5 years, from an average of 6.5% of paid claims being under-insured in 2017, up to 16.5% in 2021.

Following this review, the Central Bank wrote to insurance firms setting out a number of areas where further action was needed to lessen this risk and make consumers aware of the implications of under-insurance. For example, insurance firms providing home insurance are requested by the Central Bank to write to their customers to explain under-insurance, the consequences of being under-insured, the reasons why this is a heightened risk and, how policyholders can better estimate their sum insured value.

While the Review was undertaken specifically in relation to insurance undertakings, the Central Bank has advised that it expects insurance intermediaries to also take action, as appropriate, in ensuring customers’ best interests are protected, and the potential risks of under-insurance are effectively mitigated and communicated to customers. In that regard, the Central Bank has also said that these expectations would also apply to banking institutions when operating under an authorisation as an insurance intermediary.

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