A ban on insurance companies punishing customers who are loyal to them with higher renewal costs will take effect tomorrow.
The move will not stop new customers from getting discounts, but will ensure the market is fairer, the Central Bank said.
The ban is on so-called price hikes, where customers are charged more each year they stay with the same insurer, instead of being rewarded.
the Irish independent has continually highlighted the dubious practice for years.
In March, the Central Bank issued regulations banning practice in the home insurance and car cover markets.
Also known as double pricing, it involves insurers that use algorithms and other big data techniques to identify vulnerable customers who are unlikely to shop around during renewal time.
Insurers then send them higher renewal quotes than are justified for the cost of providing the insurance coverage.
This is a practice that especially affects older people in this country.
Reports compiled by the Central Bank have found that those who remain loyal to the same home insurer can pay up to € 161 more per year for cover than a new customer.
Motorists who are loyal to the same provider can pay up to € 112 more for cover after nine years of loyalty.
Even higher price discrimination was found by Sinn Féin, financial spokesperson, Pearse Doherty, who did extensive work to expose the corrosive impact of price run on insurance prices.
The Central Bank (Supervision and Enforcement) Act 2013 (Section 48 (1)) (Insurance Requirements) Regulations 2022 will apply to insurance providers and brokers from 1 July.
From that date, insurance providers will not be allowed to charge renewal customers a premium higher than they would have charged an equivalent year-one consumer renewing their policy.
However, to support competition and conversion, new customer discounts will be allowed.
Insurers and brokers will be required to conduct an annual review of car and home insurance pricing policies and processes to ensure fair practices.
The regulations also set out the information that must now be provided to consumers before the automatic renewal of an insurance policy, including the right of cancellation.
The changes come despite insurance companies telling the Oireachtas Finance Committee in the past that they are not involved in double pricing or price hikes.
However, research by the regulator has found that price step is common.
“Our analysis shows that price increases are common in both the private car and home insurance markets,” a Central Bank report found.
Sinn Féin’s Mr Doherty, who has been campaigning on the issue for years, welcomed the ban.
“For years, insurance companies have been giving up their customers through a practice known as double pricing or price hike,” he said.
“It’s a win for consumers and should bring insurance prices down in the coming months and years.”
But Mr Doherty said he was concerned about loopholes in the new rules the insurance industry could use to effectively avoid this ban – especially for customers renewing for the first time.
“We must therefore keep in mind the rules of this ban to ensure that customers see the benefit in their pockets,” he said.
When asked recently why it took the Central Bank so long to ban price hikes, Derville Rowland, director general of financial conduct, denied that the regulator had delayed dealing with the issue.
“I just do not agree that our kicking and screaming was dragged into this, or that there was a delay,” she said.