Insurance Ireland welcomes the CBI’s Final Report (the ”Report”) and Public Consultation Following its Review of Differential Pricing in the Private Car and Home Insurance Markets. We are grateful for the opportunity to provide feedback on this Consultation. It is important for insurers that they continue to deliver fair consumer outcomes through innovative products and services and the proposed rules should support this objective. The proposed measures amount to a significant change for the market and for how insurance has traditionally been managed. A 12-month implementation period would be the minimum that is necessary to implement the required changes effectively.
We agree with the approach outlined in the Pricing Practices section of the Consultation whereby price walking is banned for consumers who remain with an insurer beyond two years while the pro-competitive option for new business discounts is retained. We would be grateful for clarity on the proposed Regulation 2(2)(a) of the Code and on closed books as outlined in our replies to the questions in the Pricing Practices section. We are pleased to note from our interactions with the CBI that it is cognisant of the changes that insurers had already been making following the publication of the “Dear CEO” letter of September 2020 in terms of the approach outlined in the Pricing Practices – Annual Review and Record Keeping section of the Consultation. It is our understanding that the requirement for an annual review is to be conducted within the calendar year and will apply from the commencement of the new Consumer Protection Code (CPC) in 2022.
We have significant concerns about the written opt-in consent approach proposed in the Automatic Renewal section of the Consultation. This proposal refers to written opt-in consent across all personal non-life insurance products, including products such as health and dental insurance, which were not examined in the Report, and should be excluded from the scope of these proposals.
A large proportion of customers in the direct and intermediary channels transact business over the phone. In the telesales scenario we would suggest that consent be given over the phone and relayed to the customer by way of their policy documentation, i.e., explicit consent could be given over the phone and confirmed on documentation received after the sales process.
A written opt-in consent approach would result in a risk for consumers of becoming inadvertently uninsured, which would have serious consequences in the areas of motor, home, health, and dental insurance. Indeed, the Financial Conduct Authority (FCA) expressly recognised this danger when introducing new opt-out rules in the UK from 2022 in their Policy Statement “General Insurance Pricing Practices Market Study, Feedback to CP20/19 and Final Rules”, and these opt-out rules specifically exclude health and medical insurance from scope.
Our view is that, if an opt-in approach is to be followed, it should be technologically neutral as we outline in our Response and should only apply to the products examined in the Report, i.e. i.e., private car and home insurance products for personal consumers. However, we believe that it would be more consumer protection focussed to adopt an opt-out approach as the FCA have done. This would be the preferred approach in our view and would lead to the best outcome for consumers.