A requirement for motor insurers to list a customer’s previous five years’ premiums on their renewal notice, which was introduced in an effort to push premiums lower, may be having an unwanted effect.
That’s according to online broker, Insuremycars.ie, which claims the change introduced three years ago is leading customers to think they are getting good value when their premiums appear to be falling, when in fact they may get even better value by shopping around.
Motor insurance premiums have been falling in recent times according to official data from the Central Statistics Office.
In the year to December, they dropped by 8%.
The Consumer Insurance Contracts Act 2019 requires insurer to list the last five premiums paid by the consumer in order to provide transparency and combat the practice of dual-pricing.
It involves an insurer charging loyal customers a higher premium than new customers, despite them both having a similar risk profile.
But Jonathan Hehir, managing director of Insuremycars.ie, says in an environment in which prices are falling, this requirement is having the unintended consequence of making consumers think they are winning, causing them to not shop around for better quotes.
He says they have come across many examples of customers whose premiums on their renewal notice were falling, but when they shopped around at renewal they were able to secure even bigger discounts.
“Just because your existing insurer is quoting you a better premium than last year’s, this does not mean it’s the best deal on the market and that shopping around is still as relevant as ever when it comes to securing the best value product on the market,” he said.
The Central Bank has recommended a ban on home and motor insurance customers being charged a loyalty penalty the longer they remain with an insurance provider, a practice known as “price walking”.
However, the regulator has stopped short of recommending the outlawing of dual pricing.
“Transparency around insurance quotes is very important and there is definitely merit in the 2019 legislative changes to insurance renewal,” Mr Hehir said.
“However, we must also ensure that the consumer is as informed as they can be and that they are not misled into believing that just because a premium is reducing, that it’s the best they can get.”
While car insurance costs have fallen by around 8% in the last year, Insuremycars.ie claims some motorists are able to save up to 25% by shopping around at renewal time.