Competition commission to investigate motor insurance providers

The Competition and Consumer Protection Commission has issued summonses to motor insurance providers compelling them to appear before them to give evidence regarding suspected breaches of competition law in the sector.

The commission is undertaking an investigation into possible breaches in which industry participants have openly signalled upcoming increases in premiums.

Commenting on the issuing of summonses, the body’s chairwoman Isolde Goggin said that statements signalling price hikes could results in “a degree of unspoken co-ordination” between rivals.

“Statements by senior industry players have raised serious suspicion as to whether there is a link between these messages and subsequent price increases. The evidence collected through both the witness summonses and the information requests will assist us in establishing whether there has been a breach of competition law,” she said.

The commission’s move comes amid growing anger over a series of price hikes of close to 40 per cent by insurers in recent months. The cost of car insurance is reported to have climbed by 70 per cent over the last three years.

Fine Gael MEP Brian Hayes welcomed the body’s decision to investigate the issue.

“Consumers are angry at this growing problem and rightly so. The relationship between insurers and consumers has been broken in recent years. There needs to be more transparency as to why premiums are being increased. And I think we need to aim for a system which allows for fairer pricing. A rise of 38 per cent in premiums in one year does not represent fairness,” he said.

“This is a complex issue however, and it should not be a case of laying blame at the feet of insurers. Insurers are facing rising regulatory costs as well as an increase in the level of claims to be paid out,” Mr Hayes added.

Single market

Separately, Irish road hauliers are looking to purchase motor insurance in the European single market in order to avoid rocketing increases and a lack of competition in Ireland.

Speaking at the Joint Committee on Finance, Public Expenditure and Reform on Tuesday morning, Verona Murphy, president of the Irish Road Haulage Association (IRHA), asked why road hauliers are not allowed to access the European single market for insurance as commercial entities, noting that there is "no competition" in the Irish market at present.

“There is nothing competitive about the underwriters we have in this market – unless we bring in another 10 that won’t change,” she said. Ms Murphy added that about 43 per cent of trucks in Ireland now have foreign-registered plates, while about 30 per cent of Irish operators are now based abroad.

Legal costs were another issue raised at the committee. Paul Redmond, chief executive of the Car Rental Council, said that the Personal Injuries Assessment Board, which was established more than a decade ago, has led to more legal representation.

The cost of claims is another concern.

"There's no reason why whiplash injuries in Ireland should pay multiples of damages paid in the UK and the continent," Neil McDonnell, general manager of the Freight Transport Association Ireland said, adding that another issue is serious fraudsters falsifying claims.

Joe Herron of the Irish Taxi Drivers’ Federation said prohibitive quotes are a challenge. While taxi drivers can bring a complaint to the Motor Insurers Bureau of Ireland if they’re refused a quote three times, if the quote is prohibitive they can’t bring this as a complaint.

“The problem really is that there are only three insurance companies that will quote us,” he said.