Dáil Éireann Debate, Tuesday - 27 June 2023
202. Deputy Richard Bruton asked the Minister for Finance if he is aware that the CSO is showing that the cost of home insurance has gone up by 23% in the past six months; if he has assessed the forces behind this rise; if further investigation or new policy initiatives are warranted; and if he will make a statement on the matter. [30755/23]
View answerI am aware that home insurance costs may be rising for some consumers. However, with regard to the Deputy's question, I note that according to the latest CSO Consumer Price Index data for May 2023, the price of ‘insurance connected with the dwelling was 18.9 per cent higher year-on-year, although it did reduce by 2 per cent in the month from April 2023. Over the period related to the the question, I note that it rose by 9.2 per cent in the last six months (compared to November 2022).
A key driver of home insurance is the property rebuild cost (or reinstatement value), which is based on the total cost to reconstruct the property. As the Deputy will be aware, construction costs are currently subject to intense inflationary pressure. The latest CSO Wholesale Price Index for May 2023 illustrated that the cost of building and construction “materials” rose by 9 per cent in the year. As construction costs generally increase, rising rebuild and repair costs can also be expected to impact upon home insurance premiums.
Neither I, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products, as this is a commercial matter which individual companies assess on a case-by-case basis. This position is reinforced by the EU Single Market framework for insurance (the Solvency II Directive).
Notwithstanding this, the Government is keenly aware of the impact that insurance costs can have on many groups – including homeowners - and has therefore prioritised reform of this sector via the Action Plan for Insurance Reform. Regarding the cost of home insurance, a key Action Plan deliverable has been the Central Bank’s ban on price walking. This pro-consumer ban will protect customers who prefer to stay with their current home insurer from being penalised just for doing so, while still allowing others to benefit from ‘switcher’ discounts from providers who may also seek to compete on price.
However, it is important to understand that the price walking ban does not mean home insurance premiums cannot rise, as they are affected by many factors, including current construction inflation. It is therefore important for policyholders to compare with other providers to ascertain if they can get a better consumer-focused deal by switching. Finally, it should be noted Insurance Ireland has detailed advice around home insurance and the benefits of shopping around on its consumer website, www.understandinginsurance.ie
