RegSol Blog

Spotlight on Transparency for Financial Brokers: New Insurance Renewal Requirements & New Consumer Protection Code Addendum March 2020

October 2019

In July 2016, the Government established the Cost of Insurance Working Group (CIWG). The objective of the CIWG was to identify and examine the drivers of the cost of motor insurance and to recommend short-, medium- and longer-term measures to address these issues. 

In January 2017, the Report produced by the CIWG on the Cost of Motor Insurance was published by the Department of Finance, which included an Action Plan to implement the identified recommendations.  Coming into force on 1 November 2019, the Non-Life Insurance (Provision of Information) (Renewal of Policy of Insurance) (Amendment) Regulations have been designed to afford greater protection for the consumer in providing more transparency to insurance policyholders, a key theme in the output of the Consultation Paper 114 and to be shortly in force as a result of the amendment regulations. 

In the pursuit of transparency however, are consumers already bombarded with too much information and overloaded arguably with too much choice? The Central Bank and CIWG would argue that this is important to allow consumers to shop around. Let’s evaluate the nature of these changes which can be summarised as follows: 

  • Insurers must provide additional information on the premium breakdown to consumers and must offer a price on all the cover options they offer. It is proposed that insurers will also be required to provide this additional information on the premium breakdown when a person first gets a quote for a policy as well as at renewal notice stage, together with the other information referred to in Regulation 6.
  • Insurers must extend the current renewal notification period from 15 working days to 20 working days to make it easier for motorists to compare pricing when purchasing motor insurance; and
  • an insurer shall, in respect of a policy of private motor insurance to be renewed, include, on the same page as the renewal premium is first set out, the following information:
    • the premium paid in the previous year, or 
    • where applicable, following any mid-term adjustment made to the policy in the previous year— 
      • the provision of an annualised premium figure for the previous year excluding fees or charges applied as a result of that adjustment, and
      • a statement indicating that the annualised premium figure shown may not reflect the actual premium paid in the previous year.

Last week we saw the headlines and radio interviews with the Central Bank of Ireland explaining the new addendum to the Consumer Protection Code (CPC) designed to take into account provisions arising from the EU (Insurance Distribution) Regulations 2018 and “Enhanced Consumer Protection Measures,” following consultation paper CP116 on intermediary inducements. The following parts of the CPC amended and effective from 31 March 2020 are as follows:

  • Chapter 3- Conflicts of Interest- avoiding conflicts of interest by placing consumer’s best interests above the consideration of fees, commissions, rewards or remuneration linked to targets relating to volume and bonus payments linked to business retention 
  • Chapter 4- Provision of Information
    • using the term “Independent” restricted to regulated activities on the basis of a fair analysis of the market AND where the intermediary does not accept and retain any fee, commission or other reward or remuneration where advice is provided in respect of regulated activities. Exceptions are minor and restricted to non- monetary benefits (conference, hospitality, IT Software) and fees paid by a consumer. Note also the amendment to 4.16 A regarding MiFID Article 3 services in using the term “independent”
    • Summary details of all arrangements for any fees, commission, other reward or remuneration paid or provided to intermediary must be made available in its public offices or on its website and brought to the attention of the consumer
  • Chapter 12- Definitions
    • Press release information is available HERE.

If you require assistance with Consumer Protection whether it is training or a compliance review or audit, please contact RegSol.

By Judy De Castro - Regulatory Consultant