A BAN on motor and home insurers imposing so-called loyalty penalties on customers is to be introduced in Britain.

The move is likely to increase pressure for a similar ban on what is also called dual-pricing here.

Central Bank of Ireland regulators are considering whether to recommend a ban of the practice after an initial report it published last September found that that dual-pricing across motor and home insurance policies is more common than insurers have admitted.

Most insurers had insisted to an Oireachtas Committee there was very little dual-pricing in this market.

The Central Bank has estimated that 2.5 million Irish policy holders paid a combined total of €187m more than the actual cost of their policies in a single year, due to dual-pricing.

Dual-pricing means punishing those who are loyal to an insurer with higher premiums as they often do not shop around for better value.

Britain’s Financial Conduct Authority (FCA) has now cracked down on unscrupulous firms, forcing them to end the practice where existing customers are offered quotes that are higher than new ones.

UK regulators found last year that millions of customers were being unfairly charged higher prices.

Many firms increase prices for existing customers each year at renewal — in a practice known as price walking.

The FCA said: “This means that consumers have to shop around and switch every year to avoid paying higher prices for being loyal.

“It also distorts the way the market works for everyone. Many firms offer below-cost prices to attract new customers.

“They also use sophisticated processes to target the best deals at customers who they think will not switch in the future and will therefore pay more.”

As a result of the changes, British insurers will be required to offer renewing customers a price that is no higher than they would pay as a new customer.

The FCA admitted that the changes are likely to bring an end to unsustainably low-priced deals to some customers.

But officials said that, overall, consumers will save money over 10 years.

The Consumers’ Association of Ireland has backed a private members’ bill to ban discriminatory dual-pricing of insurance products.

The Consumers’ Association of Ireland (CAI) said dual-pricing was hitting the vulnerable, such as older drivers.

Research has found that older drivers are paying three times as much for their motor insurance cover as younger drivers.

The CAI has backed a Sinn Féin bill to ban the practice.

CAI chairman Michael Kilcoyne called on TDs to support the Insurance (Restriction on Differential Pricing and Profiling) Bill 2021.

“These practices must be outlawed in the manner that other countries have moved to protect their citizens against such mean-spirited consumer profiling practices,” he said.

Sinn Féin finance spokesperson Pearse Doherty, who produced the bill, said the practice affects millions of policyholders, costing many customers hundreds of euro a year on their car and home insurance.

The bill passed the second stage in the Oireachtas earlier in February, but a stay has been put on it for nine months pending a final report from the Central Bank on dual-pricing.

The Irish Independent was first to expose the impact of dual-pricing on customers in this country three years ago.