# Central Bank proposes to ban "price walking" on home and car insurance.



## Brendan Burgess (21 Jul 2021)

*Press Release – 21 July 2021

Central Bank proposes to end the loyalty penalty for private car and home insurance customers*

 [broken link removed]

...

Based on the evidence from the Review we are proposing a series of measures to strengthen the consumer protection framework. These proposals are included for consultation in the final report. We are proposing to:

· Ban the practice of price walking in private car and home insurance.

· Require where new customers are offered a lower price to attract their business, it should be clearly disclosed to them that this includes a new business discount.

· Require private motor and home insurance providers to review their pricing policies every year to ensure they maintain focus on their pricing practices and the impact of such practices on their customers, while also ensuring adherence to new pricing provisions and the fair treatment of consumers.

· Introduce new requirements in relation to automatic renewals, which will include consumer consent for the automatic renewal of insurance contracts, to allow personal customers to make more informed decisions.

...


The series of policy proposals are set out in a public consultation, which will be open until 22 October 2021. We welcome evidence based views in response to our consultation. Taking into account the views of stakeholders in response to this consultation, we intend to finalise these measures early next year and that they will apply to insurance providers from 1 July 2022.





*Examples of price walking in private car and home insurance 



How the loyalty penalty works in  private car insurance*


Customer 1 is renewing their policy for the first time
Customer 2 is renewing the policy for the ninth time.
They both have the same risk profile and expected cost of service.
The expected cost of providing both policies is €700. When the average loyalty penalty is added:


The year one customer pays €763
The year nine customer pays €875
The year 9 customer is paying €112 more than a first year renewal customer would have been charged.

Under our proposals, these customers should no longer experience a loyalty penalty.



*How the loyalty penalty works in  home insurance*


Customer 1 is renewing their policy for the first time
Customer 2 is renewing the policy for the ninth time.
They both have the same risk profile and expected cost of service.
The expected cost of providing both policies is €350. When the average loyalty penalty is added:


The year one customer pays €357
The year nine customer pays €473


The year 9 customer is paying €116 more than a first year renewal customer would have been charged.

Under our proposals, these customers should no longer experience a loyalty penalty.


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## Brendan Burgess (21 Jul 2021)

Seems to be the same as the UK's recent ban



			https://www.fca.org.uk/publication/policy/ps21-5.pdf


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## Brendan Burgess (21 Jul 2021)

I would go further and just ban the unfair treatment of customers. 

All customers should be able to avail of the prices on offer to new customers. 

Or else, set a 10% maximum discount in the first year. 

Brendan


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## tallpaul (21 Jul 2021)

What will happen is that the Year One customer will end up paying the same higher price as the Year Nine customer with a consequential overall rise in premiums! I have zero faith or trust in insurance companies to do the right thing!


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## jpd (21 Jul 2021)

Can a leopard change its spots?


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## Itchy (21 Jul 2021)

jpd said:


> Can a leopard change its spots?



Consumers or industry?


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## NoRegretsCoyote (21 Jul 2021)

Brendan Burgess said:


> The expected cost of providing both policies is €700. When the average loyalty penalty is added:
> 
> 
> The year one customer pays €763
> ...


Can't the year nine customer just threaten to take their business elsewhere?

Every year Zurich puts €50 on my home insurance and every year they take it off again when I ring them up and ask them.


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## Brendan Burgess (21 Jul 2021)

NoRegretsCoyote said:


> Can't the year nine customer just threaten to take their business elsewhere?



Most are older customers who are just not tuned in. 

A lot of the problems are identified when their children see the insurance renewal and find that it's twice what it should be. 

And older customers tend to want to stay with the company that they have been with.  They show loyalty to their insurance company even if their insurance company penalises them for their loyalty.

Brendan


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## odyssey06 (21 Jul 2021)

NoRegretsCoyote said:


> Can't the year nine customer just threaten to take their business elsewhere?


Not that easy if you've had recent claims or an older car, for example.


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## NoRegretsCoyote (21 Jul 2021)

Brendan Burgess said:


> And older customers tend to want to stay with the company that they have been with. They show loyalty to their insurance company even if their insurance company penalises them for their loyalty.


Am at a loss why they can't seek a discount like the rest of us.

And why active customers shouldn't benefit at the expense of lazy ones.


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## Thirsty (21 Jul 2021)

NoRegretsCoyote said:


> Am at a loss why they can't seek a discount like the rest of us.
> 
> And why active customers shouldn't benefit at the expense of lazy ones.


I have posted on this before; we totally fail to realise the impact that the changes in customer interaction have had.

In the last week alone I spent 34 minutes on hold to a major bank to make an appointment at my nearest branch.  The customer services rep was unable to do so, took my number and promised to call back - still waiting.

I tried to go online to make an appointment at any one of several branches that are in driving distance. No joy.

Feeling like I am in the 19th century, I have today resorted to writing a letter to request an appointment.  

And I know my way around & this is an issue I'm motivated to resolve.

I can well understand why not everyone is willing to jump through these hoops.  But why the heck should they have to elect to do so in the first place!


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## Itchy (21 Jul 2021)

Thirsty said:


> But why the heck should they have to elect to do so in the first place!



The following is a list of the details that are required by an insurance company in order to purchase car insurance in Sweden:

PPS No. (personnummer)

END


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## Itchy (21 Jul 2021)

We could have a great system if PPS No.'s weren't viewed in the same manner as ATM PINumbers!


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## Páid (22 Jul 2021)

Itchy said:


> The following is a list of the details that are required by an insurance company in order to purchase car insurance in Sweden:
> 
> PPS No. (personnummer)
> 
> END


Do they not need name, address and some form of photo identification so they can verify identity?


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## Itchy (22 Jul 2021)

Páid said:


> Do they not need name, address and some form of photo identification so they can verify identity?



Nope, you supply the number and all the systems are linked in: transport agency (Vehicle reg, driving history), previous insurance history (experience, claims, NCD etc.), population register (name, address, spouse details, credit record etc.). 

When you interact with an agency you use the number with an e-ID (BankID) on your phone to verify your identity or sign documents digitally.


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