RegSol Blog

Central Bank Highlights Under-Insurance in Home Insurance Market

November 2022

On 22nd September 2022, the Central Bank of Ireland (“Central Bank”) wrote to insurers telling them they must do more to warn customers of the risk of under-insurance in the home insurance market, in light of the impact of inflation on construction costs.

This follows a Thematic Review carried out by the Central Bank, which found that under-insurance in the home insurance market had been steadily increasing over the last five years – from an average of 6.5% of paid claims being under-insured in 2017, up to 16.5% in 2021.

The Central Bank's review of the home insurance market identified shortcomings in two areas:
  • clarity, consistency and timeliness of communication with consumers, and
  • the effectiveness of risk management tools in identifying and assessing risk to consumers.

The Central Bank also outlined its supervisory expectations for all firms that provide home insurance products to consumers to:
  1. Send a clear communication of the risks and examples of the consequences of under-insurance to policyholders, the reasons why this is currently a heightened risk and how policyholders can better estimate an adequate sums insured value, in a stand-alone, written form;

  2. Act honestly, fairly and professionally in the best interests of its customers and the integrity of the market.

  3. Put in place a clear plan to address the points raised in the Dear CEO Letter. The plan must include clear and reasonable timelines for implementation of mitigating actions, with appropriate governance and sign-off. The plan should be submitted to the Central Bank by 28 October 2022;

  4. Ensure the board has appropriate oversight of the plan to address the gaps identified, or the actions required.

The Dear CEO Letter can be found here and if you have any queries in how to apply the above Central Bank supervisory expectations to your firm, please contact us at