The Government plans to make insurers disclose clearly to customers if they are deducting any taxpayer supports from compensation payments made on claims, under a Bill that is set to be drafted to help increase transparency in the insurance market.
It follows on from insurers deducting certain State supports during the Covid-19 pandemic when making payments on business interruption claims. Insurers will also be required under the planned laws to make such information available to the Central Bank’s national claims information database.
"There is a public interest in ascertaining the value of State supports being deducted by insurers in claims payments on an annual basis," the Department of Finance said in a so-called summary regulatory impact analysis of the measures in the planned Insurance (Miscellaneous Provisions) Bill, published on Wednesday.
“The pandemic demonstrated that certain State supports were deducted in relation to business interruption claims made by certain enterprises. Being able to determine the extent of such deductions will allow policymakers to better design legislation for future State supports to ensure that the taxpayer does not cover losses already covered by insurance, and/or can recover any such moneys.”
Insurers operating in the Irish market had paid out €130 million as of last month on business interruption claims stemming from the Covid-19 crisis, fuelled by landmark court rulings and pressure from the Central Bank, according to the regulator.
Central Bank
The planned legislation will also compel the Central Bank to submit a report within 18 months of its enactment to the Minister for Finance setting out the steps it has taken to regulate the practice of “price walking” in the insurance market.
The Central Bank said during the summer that it plans by next July to ban the widespread practice of price walking, where customers are charged higher premiums relative to the expected costs the longer they remain with an insurer, in the motor and home coverage markets.
However, the regulator stopped short of following the UK in effectively prohibiting providers offering below-cost discounts to lure new customers.
“The practice of applying a loyalty penalty to long-standing customers, known as price walking, will be banned next year. This Bill will protect motorists and homeowners from this practice in the insurance industry,” said the Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming, on Wednesday. “This Bill will facilitate the Central Bank publishing data on how changes and savings for motorists and homeowners are being enforced.”
