Differential Pricing Regulations

As you are aware, in July 2021, the Central Bank of Ireland (CBI) published its Final Report and Public Consultation on Differential Pricing. The principal conclusion from the Report was that the practice of price walking could result in unfair outcomes for some consumers in the private car and home insurance markets. Having concluded a public consultation process on additional consumer protection measures in this area, the CBI proceeded with introducing a ban on price walking with effect from 1 July 2022. This means that, from that date, insurance undertakings and insurance intermediaries cannot charge consumers, who are on their second or subsequent renewal, a premium higher than they would charge an equivalent year one renewal consumer.

As an advocate of greater transparency for customers, Liberty Insurance welcomed these Regulations. We believe greater transparency within the sector has the potential to deliver improved consumer trust.

That said, we are acutely aware of the challenges that insurers and brokers alike have faced in ensuring businesses fully understand and implement the changes required to conform to the new regulations.

On that note, we have put together a short summary/Q&A about the Regulations and how they may impact your business which you may find helpful.


When did the Regulations take effect?

The Regulations came into effect on 1 July 2022, meaning all new policies and renewals from 1 July 2022 must follow the new Regulations.

Who do the Regulations apply to?

The Regulations apply to “consumers” as defined in the in the Consumer Protection Code 2012 (CPC).

What products do the regulations apply to?

The Regulations apply to Motor and Home insurance policies for consumers such as, Private, Car, Taxi, Light Commercial Vehicle and Home Insurance. The aforementioned products are not an exhaustive list, nor does Central Bank intend to provide an exhaustive list of policies in or out of scope of the Regulations. 

What principle areas do the new regulations cover?

  1. Pricing – ban on price walking.
  2. Annual review and record keeping.
  3. Automatic renewal arrangements.

 What does a ban on Price Walking mean?

An insurance undertaking or insurance intermediary shall not set a subsequent renewal price that is higher than the equivalent first renewal price (EQFRP), or that discriminates against consumers based on tenure, or systematically exceeds the first renewal price for consumers.  

What does a ban on Price Walking mean for Intermediaries and are Intermediaries’ fees and commissions included in the calculation of the subsequent renewal price?  

An insurance intermediary that is involved in the setting of any portion of the subsequent renewal price of an insurance policy shall ensure that the portion the insurance intermediary sets or its contribution to that portion is set at a level that is no higher than it would be set for a first renewal. The calculation of subsequent renewal price does include insurance intermediaries’ fees and commissions. 

What is Regulation 7 and who falls under the ‘jointly responsible’ term set out in it?

Regulation 7 is intended for a situation where more than one insurance undertaking or insurance intermediary is involved in developing a product and the subsequent pricing of the product. The CBI has advised that, it is for individual firms to assess their own business model to determine whether they are involved in the pricing of the product. However, the CBI does go on to clarify that, the insurance undertaking and insurance intermediary will only be responsible for their respective part in setting the price and where insurance intermediaries do not discount fees or flex commissions, they may not have a role in price setting.

What are the requirements in respect of the Annual Review?

Insurance undertakings and insurance intermediaries have an obligation to conduct an annual review of all motor and home insurance pricing policies and processes. The Regulations do not require firms to review each policy individually, rather the requirement is to ensure general motor and home insurance pricing policies and processes for all customers are compliant with the Regulations. Insurance undertakings and insurance intermediaries are required to have completed an annual review of their motor and home insurance pricing policies and processes within two months of each year end. Therefore, the first review should be completed by end-February 2023.

What is changing with respect to Automatic Renewal arrangements?

The regulations introduce new disclosure requirements to ensure the automatic renewal process is more transparent for all personal non-life insurance products. While the CBI expects firms to be compliant with the Regulations by 1 July 2022, they have acknowledged the challenges this may present for some firms with regard to systems, processes and documentation. Therefore, the CBI expects firms to have fully implemented the automatic renewals requirements by 1 October 2022.