The Cabinet has approved the drafting of a new bill aimed at improving transparency in a number of areas of the insurance market – including how often insurers deduct State supports to businesses from compensation pay-outs.
The Insurance (Miscellaneous Provisions) Bill will also require to Central Bank to update the Minister for Finance on its plans to ban ‘price-walking’ – a practice that results in customers who stay with the same insurance provider for a number of years paying more for their premiums.
During the pandemic, a number of insurers deducted COVID-19-related State supports paid to businesses from final claims settlements linked to business-interruption insurance.
The Government says that insurers may be contractually entitled to do this, but it wants more data on how widespread this practice is, to help decide if it needs to take further action to address the issue.
The proposals will force insurers to inform consumers about any such deductions, and allow the Central Bank to collect and publish this information as part of the National Claims Information Database.
Seán Fleming (Minister of State with responsibility for insurance, pictured) said that the bill would provide greater transparency on this practice, and ensure that consumers were informed of, and given explanations for, any deductions.
On price-walking, which the Central Bank is proposing to use its current regulatory powers to ban next year, the bill will require the bank to produce a report on the impact of the measure after 18 months, giving its views on whether further legislation is needed.
The bill also includes amendments to the European Union (Insurance and Reinsurance) Regulations 2015, in order to address issues identified by the Central Bank with the Temporary Run-off Regime (TRR) for UK and Gibraltar-based insurers.
The TRR was set up due to the UK’s departure from the EU, after which these insurers lost the ability to write new business in EU member states.
These amendments will provide for technical changes, in order to ensure that certain insurance firms who provide reinsurance, and firms in liquidation, can use the TRR to run off their existing Irish insurance contracts.