On 20 October 2021, the General Scheme of the Insurance (Miscellaneous Provisions) Bill 2021 (the Bill) was published. It is proposed that the Bill will address several insurance-related issues that have come to light since the Action Plan for Insurance Reform was published in December 2020.

In this note, we summarise the key provisions of the proposed Bill.

Proposed amendments to the Consumer Insurance Contracts Act 2019

  • Section 16(10) of the Consumer Insurance Contracts Act 2019 (CICA 2019) sets out the disclosure requirements of consumers and insurers in claims handling. The Government has acknowledged that the text of section 16(10) may have had the unintended consequence of encroaching on legal professional privilege. For this reason it is proposed that section 16(10) be repealed and replaced by section 16(A). Section 16(A) clarifies that the scope of the disclosure requirement does not extend to require disclosure of privileged information.
  • A new section is to be inserted in CICA 2019 to require all non-life insurers to notify a claimant of any deduction made to a final claim settlement amount, the reason for same and the final amount deducted. The aim of this section is to ensure that insurers are fully transparent with consumers with regard to any deductions that are made in relation to the settlement of a claim, in particular with regard to State supports that may have been provided to the consumer for a particular reason.

Proposed amendments to the European Union (Insurance and Reinsurance) Regulations 2015

The proposed amendments to the European Union (Insurance and Reinsurance) Regulations 2015 aim to address certain issues with respect to the Temporary Run-off Regime (TRR). The TRR was introduced post Brexit to allow qualifying UK and Gibraltar-based insurers (Firms) and insurance intermediaries to administer their existing insurance portfolios with a view to terminating their activities in Ireland.

The proposed amendments will clarify the position of:

  • Firms in liquidation, that otherwise satisfy the conditions of TRR, to enter the TRR and will clarify that the Central Bank of Ireland (CBI) will not withdraw TRR authorisation of Firms that enter liquidation.
  • Firms in the TRR, which are in the process of running off their insurance liabilities in Ireland and also conduct reinsurance activity in Ireland. The proposed amendment to regulation 10(3) will expressly provide for the ability of Firms to carry on reinsurance activity in Ireland, on the same terms that other non EEA (re)insurers can.

Proposed requirement for the CBI to report on price walking

In July 2021, the CBI published its final report on its review of differential pricing in the Irish home and motor insurance markets. The report identified "price walking" as a particular issue. "Price walking" is the practice of customers being charged higher premiums relative to the expected cost of cover the longer they remain with an insurance provider and is a form of differential pricing. In its final report, the CBI made a number of proposals including banning the practice of price walking. Subject to the outcome of its industry consultation on the proposals which closed on 22 October, the CBI has signalled its intention to implement these proposals by adding new provisions to the Consumer Protection Code 2012 (the CPC) with effect from 1 July 2022.

Head 4 of the Bill would require a report to be produced by the CBI 18 months after the Bill has been enacted and commenced, to show the steps it has taken (such as amending the CPC) with regard to price walking and to provide views on a number of areas, including whether further legislative or regulatory action is required. Once available, the CBI's report it to be presented to both Houses of the Oireachtas to help facilitate policy formation.

Proposed amendments to the CBI (National Claims Information Database) Act 2018

The Bill proposes to amend the CBI (National Claims Information Database) Act 2018 to increase claims transparency by allowing the CBI to collect data in relation to insurers deducting the value of State supports from insurance settlements or amounts paid for insurance claims.

Next steps

As yet, there is no clear timeline for the enactment of the Bill. The proposed Bill must go through pre-legislative scrutiny, which involves meetings with relevant stakeholders. Once this is complete the final drafting of the legislation will commence. It is expected that there will be a degree of political impetus behind the progression of aspects of the proposed Bill, which may mean that the Bill will be enacted sooner rather than later.