Drivers could benefit from lower motor insurance costs following an investigation by the Competition and Consumer Protection Commission (CCPC).
Motor insurers AIG, Allianz, Axa, Aviva, FBD and broker AA Ireland have pledged to reform compliance on foot of a CCPC inquiry into allegations that industry players were "signalling" price increases to each other.
The companies’ deal with the commission is meant to boost competition among motor insurers, potentially leading to lower premiums for drivers.
Brian McHugh, CCPC member responsible for competition enforcement, pointed out that businesses must set prices independently.
“Any form of pricing statements and suspected co-ordination that could manipulate future pricing raise serious concerns under competition law, as this can impact on competition and ultimately the price consumers pay,” he said.
Mr McHugh added that the potential for consumer harm was particularly high in motor insurance, as the law obliged consumers to buy it.
Sources say it will be hard to quantify the agreement’s impact on prices, but predicted that improved competition between the companies would cut charges.
The commission began investigating the insurers following a series of detailed public statements outlining their future premium increases in 2015 and 2016.
Regulators suspected “price signalling”, a breach of competition law, as it allows businesses to follow each other’s examples when setting charges.
The insurers have made legally binding commitments to the commission to reform compliance practices. Independent experts will monitor this.
‘Culture of compliance’
The commission will publish details of the agreements on Friday. The businesses involved account for 70 per cent of the market.
However, Brokers Ireland is not part of the settlement. Its chief executive, Diarmuid Kelly, said the CCPC never proved anti-competitive behaviour on the part of the Irish Brokers' Association, which his organisation took over in 2017.
Mr Kelly maintained that the “culture of compliance” the regulator sought was already in place when the organisations merged.
Mr McHugh argued that Brokers Ireland had a responsibility to address the IBA’s behaviour, which raised competition law concerns.
“The fact that Brokers Ireland did not enter into legally binding commitments, in the CCPC’s view arguably calls into question the organisational attitude towards compliance,” he added.