New insurance legislation must immediately deter insurers from deducting State supports, such as the Covid-19 supports, when paying out claims.
That’s the view of the Oireachtas Finance Committee which has published its views on the pre-legislative scrutiny of the Government’s new insurance bill.
The committee has also called for clarity on the Central Bank’s proposed ban on “price walking”, where existing customers are hit with higher premiums for sticking with the same company compared to newer customers.
The Central Bank indicated this week it still intends to bring in the ban in July of this year.
In the report, committee chair John McGuinness cites how businesses interrupted and/or closed due to Covid-19 availed of the likes of the Employment Wage Subsidy Scheme and the Covid Restrictions Support Scheme to help them remain afloat.
Against the spirit of supports
“The Joint Committee is of the view, however, that the practice of insurers deducting these State supports from payouts related to business interruption claims should be strongly discouraged as this is entirely against the spirit of these State supports,” the Fianna Fáil TD said.
Under the proposed bill, insurers would have to disclose if they deducted certain State supports when making payments on claims.
Mr McGuinness said the new insurance bill should include immediate measures to tackle this practice.
The committee report highlights that legislation can’t be applied retrospectively or to insurance contracts that were awarded in the past but there sh