Brendan Burgess
Founder
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Press Release – 21 July 2021
Central Bank proposes to end the loyalty penalty for private car and home insurance customers
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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.
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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
Under our proposals, these customers should no longer experience a loyalty penalty.
How the loyalty penalty works in home insurance
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.
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 year one customer pays €763
- The year nine customer pays €875
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 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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