Motor insurance firms to be forced into greater transparency
Insurers will have to give more information to those renewing policies under new rules
Motor insurers and brokers will be forced to provide more information to consumers renewing their policies under new rules that come into force on Friday.
The rules imposed by the Central Bank of Ireland will require insurers and brokers to remind private motor customers what they paid for their policy the previous year. That information will have to appear on the same page of the documents as the premium proposed for the coming year.
If the premium has changed during the year because new drivers were added or removed, or the vehicle covered was changed, the renewal document will give the annualised cost of the current level of cover.
For private and commercial motor customers, alternative policy options will also have to be given. If a customer has comprehensive insurance on their vehicle but the insurer also offers third-party fire and theft cover, and third-party only cover, premium charges for these will have to be provided.
Finally, insurers are being obliged to extend to 20 working days the renewal notice period. At present, customers are entitled to get their renewal notice 15 working days ahead of the current policy expiring.
The extension of the notice period will apply also to household insurance and any other non-life policy. However, there is no requirement for insurers to remind householders what they paid for home insurance the previous year.
Gráinne McEvoy, the Central Bank’s director of consumer protection, said the new rules would help consumers “make better-informed decisions when shopping around for their insurance policies”.
“We’re insisting that insurers put the price comparison on the same page of any renewal notice,” she said. “This makes it easy for customers to see if their premium has increased.”
She said the regulator expected the insurance sector to “embrace these rules in the best interest of their customers” and warned the Central Bank would closely monitor compliance.
However, Brokers Ireland, which represents 1,250 broker firms across the State, said that rather than streamlining the insurance-buying process, “these changes will also ensure that even more paperwork will be provided to consumers . . . with no indication that any of it will be read”.
Sowing of confusion
Cathie Shannon, director of general insurance at the industry group, said while brokers welcomed any improvement in transparency – such as the decision to remind customers of last year’s premium – the changes proposed were likely to sow confusion.
There had been no customer demand to be informed of other types of cover, Ms Shannon said, and she expressed concern that some customers might select a lower level of cover purely on price.
She said the Central Bank should be trying to streamline the paperwork people receive “as the Government prioritises the green agenda”.
Fianna Fáil finance spokesman Michael McGrath described the new measures as “modest in nature”.
“We are now almost three years on from the publication of the Cost of Insurance Working Group report and the measures being implemented now are very much in the ‘easy win’ category,” he said. “These changes should have happened a long time ago.”
The changes were first flagged to the industry at the start of the year.