Michael McGrath (Cork South Central, Fianna Fail)
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At the outset, it is important to note that neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency IIDirective).

In July 2022, the Central Bank introduced Regulations to ban price walking in the motor and home insurance markets for personal consumers. This ban means that insurance undertakings and insurance intermediaries cannot charge consumers, who are on their second or subsequent renewal, a premium higher than they would charge an equivalent year one renewal consumer. Therefore, consumers who remain with the same provider will no longer pay a “loyalty penalty”.

In addition, the Regulations allow insurance providers to continue to provide discounts for new customers, giving consumers the opportunity to avail of a better-priced premium by switching provider, if they are not satisfied with the existing provider. The Government believes the approach taken by the Central Bank is appropriate, proportionate and well-suited to the Irish insurance market.

However, the price walking ban does not mean that insurance prices cannot rise, as they are affected by many factors. For example, in the case of home insurance, I understand that a key driver is the property rebuild cost (or reinstatement value), which is based on the total cost to reconstruct the property. As the Deputy will be aware, construction costs are subject to inflationary pressures at the moment.

Indeed, the Central Bank has said that an insurance premium could increase without being price walked. According to the Bank, “customers’ premiums may still vary from year to year for other reasons, including, for example, a change in their risk profile as a result of having made a claim or a change in an insurer’s rates charged for the same risk”. It is therefore important for policyholders to compare with other providers to ascertain if they can get a better consumer-focused deal by switching.

Nevertheless, the Government supports the price walking ban and is determined that it will work for consumers. That is why the Insurance (Miscellaneous Provisions) Act 2022includes a requirement on the Central Bank to provide a report to the Minister for Finance setting out its views on whether further action is required in this area.

I understand that the Central Bank continues to engage with insurance providers to ensure oversight of pricing practices, and is gathering further data to help monitor the impact of the Regulations and to ensure that firms are delivering fair outcomes. As set out in the 2022 Act, a report will be submitted within 6 months of the first anniversary of the commencement of the Regulations – in other words, by January 2024. The Government is willing to consider further intervention if deemed necessary by this report, in order to continue to protect consumers.