The industry body for Irish insurance brokers has launched an unprecedented attack against the State’s competition authority over the outcome of a long-running investigation into anti-competitive behaviour in the motor insurance industry between 2015 and 2016, as coverage costs soared.
A five-year Competition and Consumer Protection Commission (CCPC) investigation into allegations of insurers signalling motor premium price increases to each other ended last August with five insurers and AA Ireland, an insurance intermediary, committing to legally binding agreements to reform their internal competition compliance. None of them conceded that they breached laws.
Price signalling occurs when businesses make their competitors aware that they intend to increase prices.
Brokers Ireland refused to sign up to a CCPC-overseen compliance agreement. In its final report on the investigation, published on Tuesday, the CCPC said the industry body’s stance “arguably calls into question the importance that organisation puts on demonstrating compliance with competition law and sends an unhelpful message to those organisations it represents”.
However, Brokers Ireland, formed in 2017 through the merger of the Irish Brokers Association (IBA) and another group, responded by accusing the CCPC to "spiteful commentary intended to blacken and sully the reputation of an organisation that had the courage to stand up to it".
It said it rejected “unreasonable and unwarranted compliance demands” the watchdog sought to impose on it, after failing to prove any instances of anti-competitive practices against the IBA during the period under investigation.
The CCPC responded by highlighting that its preliminary findings, issued in September 2020, alleged that the IBA was involved in making public announcements between 2015 and 2016 about industry-wide premium trends, engaging in discussions with an unnamed insurer on motor coverage increases, and facilitating contact between a number of insurers to discuss price hikes.
The authority said it remained "disappointed" that Brokers Ireland did not follow individual insurers subject to the investigation – including Axa, Allianz, Aviva, AIG Ireland and FBD – in signing up to legally binding competition compliance programme agreements.
Brokers Ireland said, however, the IBA’s press commentary on pricing during the period under investigation was “deliberately mischaracterised” by the authority as price announcements, when they were often responses to media requests on pricing trends.
Motor insurance premiums soared more than 70 per cent over three years before they peaked in 2016, according to data from the Central Statistics Office. Costs have since declined. Insurers put the price increases at the time down to their efforts to recover sharp losses over a number of years amid rising claims and court awards.
The stand-off between Brokers Ireland and the CCPC underscores shortcomings in Irish law that the Government is seeking to address, following years of lobbying from competition officials.
The CCPC had three options under the existing regime: close the investigation without taking any action; settle it by entering a commitment agreement with parties involved; or seek a High Court declaration that competition laws had been breached.
The CCPC said the alleged conduct ceased as it began its investigation in late 2016, meaning there would have been little benefit for consumers in pursuing litigation.
The Cabinet only last month gave the green light for draft laws to give the CCPC the power to impose administrative sanctions. The Competition (Amendment) Bill 2022 proposes maximum fines of up to €10 million or 10 per cent of total worldwide turnover, whichever is the greater, for anti-competitive practices.