The Government, which pledged on its formation in June to work to stamp out dual pricing in the insurance market, will not tackle the issue until after the Central Bank publishes a final report on matter next September, according to the minister responsible for insurance reform.
While Sinn Féin is seeking to push through a Bill early next year banning customers of a similar risk profile being charged different rates by the same insurer, the Minister of State at the Department of Finance Seán Fleming told the Oireachtas finance committee on Tuesday that the Government will not move on the issue until the regulator issues its full report.
It comes as Central Bank, which moved late last year to start a review of differential, or dual, pricing, made an initial finding in September that the practice was more common in the motor and home insurance markets than coverage providers had admitted. Meanwhile, the bank said in an interim report into the topic on Monday that homeowners sticking with the same provider typically face a “loyalty premium” of €161 a year.
The Labour Party published proposed laws this week that would prohibit dual pricing across multiple industries.
In the UK, the Financial Conduct Authority (FCA) moved recently to ban the practice outright in the insurance market, while in the US, it is outlawed in some 20 states, including New York and Florida.
The Government published a 66-point action plan early last week aimed at bringing down Irish insurance costs. Points included using incoming judicial guidelines on personal injury award levels to replace the Personal Injuries Assessment Board’s book of quantum and making it easier for perjury to be prosecuted, in an effort to reduce levels of fraudulent claims.
A Government-commissioned report showed two years ago that awards for soft tissue injuries, or whiplash, in the Republic are more than four times greater than those in the UK.
Mr Fleming said he will write to the chief executives of the main insurance firms operating in the State, of which FBD is the only indigenous company, looking for commitments that each will lower insurance rates as most of the measures in the action plan are set to be completed by the end of next year.
He said that PIAB and judges working off same personal injury awards guidelines, set to take effect from the end of next July, should see fewer claimants bypassing the State-run injuries board and resorting to the courts.
However, the Oireachtas Finance Committee’s chairman, John McGuinness, said insurance reform efforts by the last government were “hopeless” and questioned whether the latest round would deliver results for consumers.
The average Irish motor premium rose by 66 per cent from a low point of €431 in the final three months of 2013 to €714 in the second quarter of 2018 before dropping 9 per cent to €653 in late 2019, according to a Central Bank report published last month.
Insurers operating in the Republic saw profits on motor coverage lines surge by 9 per cent to €142 million last year, as the loss ratio hovered around the lowest levels of the past decade, Central Bank figures show.