Central Bank measures introduced last year to try to stamp out the practice of "price walking" by motor and home insurance companies appears to be working, a review has found.
Price walking is where a customer is charged a higher premium the longer they remain with their insurer, for no reason other than staying with the same provider.
In 2021, the Central Bank conducted a review of the Irish motor and home insurance markets, amid concern that differential pricing was taking place.
Differential pricing is where customers with a similar risk and cost of service are charged different premiums for reasons other than risk and cost of service
It found evidence of practices that could result in unfair outcomes for some including 'price walking' in particular.
The review also found that oversight of pricing practices was lacking and that automatic renewal processes lacked transparency.
As a result, it subsequently put new requirements on insurers last year, including a ban on price walking.
Now a review of the effectiveness of those actions has found consumers who are on their second or subsequent renewal are no longer paying premiums that are higher than they would have to pay if they were a year one renewal consumer.
"This means that consumers who remain with their current insurance provider no longer pay a loyalty penalty," the review said.
"Firms have achieved this by ensuring that tenure is no longer a factor used to increase the premium charged to customers."
Data also shows that insurers continue to offer new business discounts and that consumers still have the ability to shop around for discounts, something it was feared might be diminished.
"This ensures that consumers retain the opportunity to get a better-priced premium through switching insurance provider while removing the loyalty penalty for those consumers who do not switch insurance provider regularly," the Central Bank said.
The analysis also found that insurance providers have introduced required disclosures in relation to automatic renewals to help consumers make more informed decisions when renewing their insurance.
They also have much more robust oversight processes, analysis and reporting in relation to their pricing practices and models, the study found.
"Having completed our Post-Regulations Review, the Central Bank is satisfied that the Regulations are working effectively, have not caused any unintended consequences, and have addressed the loyalty penalty in pricing in the home and motor insurance market," the regulator said.
It added that it intends to consult on possible further measures on automatic renewal in a forthcoming Consumer Protection Code Review Consultation Paper.
The review was welcomed by the Minister for Financial Services, Credit Unions and Insurance, Jennifer Carroll MacNeill.
"It was never right that motorists or homeowners, who were on their second or subsequent premium renewal, could be charged a higher premium by insurers than someone else on an equivalent year one renewal," she said.
"The Central Bank’s review today shows that the price walking ban is working. It’s much better now as we’re not subject to some of the unfair practices previously in place. It means everyone can continue to look around for a better insurance deal at renewal time."
