Home Knowledge Regulations prohibiting ‘price walking’ in motor and home insurance industries published

Regulations prohibiting 'price walking' in motor and home insurance industries published


Following on from the Central Bank of Ireland’s (the Central Bank) ‘Review of Differential Pricing in the Private Motor and Home Insurance Markets‘, price walking was identified as a key consumer risk.

On foot of this, the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Insurance Requirements) Regulations 2022 (the Regulations) have now been published and will come into force on 1 July 2022.


The Regulations apply to ‘consumers’ as defined in the Central Bank’s Consumer Protection Code 2012 (as amended). Insurance undertakings and intermediaries (in the home and motor insurance sector) will be required to comply with the Regulations. The Regulations apply to undertakings and intermediaries ‘operating’ in the State, in other words, those operating in Ireland on a FOE or FOS basis will be within the scope of the Regulations too.

The Regulations do not apply retrospectively.


The Prohibition relating to motor and home insurance

Regulation 4(1) states that “an insurance undertaking or insurance intermediary shall not set a subsequent renewal price that is higher than the equivalent first renewal price”.

For the purposes of calculating the ‘first renewal price’, it is assumed that the consumer will use the same sales channel and same payment method for the purposes of obtaining an insurance quote.

The Central Bank have clarified that the calculation of a subsequent renewal price should include intermediary fees or commission. 

Though not specifically called out in the Regulations, the Central Bank have (in their FAQ document on the Regulations) clarified that the Regulations do not prohibit a higher subsequent renewal price in response to a change in risk.

In calculating the first renewal price, the Central Bank have advised that the following (non-exhaustive) list of items should be taken into account:

  • Commission
  • Insurance intermediary fees
  • Direct debit fees
  • Cashback
  • Retail vouchers
  • Free period of cover
  • Loyalty scheme points

Closed Books

Where a consumer’s policy is part of a closed book, the undertaking or intermediary shall calculate the first renewal price on one of the following basis:

1. Where the undertaking or intermediary actively markets home or motor insurance policies, it shall identify a product that is a closely matched product and shall price the first renewal price as if the consumer were seeking to obtain a policy under the said product; or

2. Where the undertaking or intermediary no longer actively markets home or motor insurance policies, but another company in its group does, it shall identify a close matched product from those products actively marketed or distributed by the insurance undertaking’s or insurance intermediary’s group, or 

3. Where no closely matched product can be identified, the undertaking or intermediary shall ensure that it does not discriminate against a consumer based on their tenure when determining the subsequent renewal price in closed books.

Annual Review

The Regulations require undertakings and intermediaries to (within two months of the year end) carry out an annual review of its pricing policies and processes to determine:

a) whether the insurance undertaking or insurance intermediary complies with the obligation not to systematically discriminate against consumers based on tenure; 

b) whether the equivalent first renewal price for consumers of longer tenure systematically exceeds the first renewal price for consumers; 

c) whether adequate controls are in place, including controls to ensure that any pricing models used do not:

a. generate prices which are systematically higher the longer a consumer’s tenure, or 
b. impair the insurance undertaking’s or insurance intermediary’s obligation to comply with general principle 2.1 of the Consumer Protection Code with respect to customers (and not just to the narrower concept of a consumer of an insurer or an intermediary).


Non-Life Insurance Policies

The Regulations (at regulation 12-14) set out specific new requirements in respect of all non-life insurance policies.

Regulation 12 provides that an insurance undertaking or insurance intermediary shall allow a consumer to exercise the right to cancel the automatic renewal of a non-life insurance policy at any time during the duration of the insurance policy, free of charge.

Where an insurance undertaking or an insurance intermediary proposes to automatically renew a consumer’s non-life insurance policy, with a duration of ten months or more, they shall notify (on paper or on another durable medium) the consumer at least 20 working days prior to the renewal date and shall include the details specified in regulation 13.

Where the policy has a duration of less than 10 months, the requirement is that the insurance undertaking or intermediary notifies the consumer at least once per year from the date of entry into the non-life insurance policy for so long as the policy continues to be renewed.


Next Steps

In advance of the 1 July 2022 implementation date, motor and home insurance undertakings and intermediaries should review their pricing practices to ensure compliance with the Regulations. Specifically, attention should be paid to the practice of offering lower first year premiums as an enticement, only to subsequently raise prices where there is no change in risk.

All non-life insurers and intermediaries should be aware of the requirements in regulations 12-14 and should ensure that their dealings with consumers adequately comply with the Regulations.


Contributed by James Grogan