The Irish central bank has come up with new rules, prohibiting loyalty penalties for motor and home insurance customers.
Called price walking, this practice will be banned from 1 July.
Once the ban becomes effective, insurers will be unable to charge old customers a higher premium on renewal than they would have charged customers who renew their policies after the first year of having a policy.
The move follows a review by the central bank, which looked into the use and impact of differential pricing in Ireland’s motor and home insurance sectors.
This review conceded price walking could lead to unfair outcomes for consumers.
Discounts to new customers will still be allowed, the bank said, in a bid to enable competition as well as switching.
Furthermore, insurance undertakings and insurance intermediaries will now have to conduct an annual review of motor and home insurance pricing policies.
The regulations set out the information that must now be provided to consumers in advance of the automatic renewal of an insurance policy, including the right to cancellation.
Besides, the new rules set out the data, which should be offered to consumers before the automatic renewal of an insurance policy. This covers the right to cancellation.
Central Bank of Ireland director general Derville Rowland said: Director General, Derville Rowland said: “Financial services providers are responsible for providing products that meet their customers’ needs fairly. We have consistently stated that we will intervene where we have reason to believe that unfair practices are occurring that take advantage of consumer behaviours and habits and we will prioritise the interests of consumers over the behaviours and conduct in firms.
“These new Regulations will significantly enhance the consumer protection framework. This will benefit consumers by removing the loyalty penalty for consumers of long tenure while preserving competition in the market.”