Motor insurers told rebates do not breach competition rules

Insurance Ireland was advised by lawyers in Arthur Cox last week that a move by member companies to sign up to providing premium reliefs for motor customers adhered to competition rules, as the industry bowed to Government pressure.

The industry body announced last Friday that leading motor coverage providers Allianz, Axa, FBD, RSA and Zurich had agreed to pass on "appropriate financial supports" to customers. Axa and Liberty Insurance have since announced rebate plans for customers, with more expected to follow suit in the coming days.

The moves come as the Covid-19 crisis has left considerably fewer vehicles on the road and, consequentially, caused fewer claims. Minister for Finance Paschal Donohoe had pressed Insurance Ireland on April 17th that there was a "strong case" for refunds from the industry, as motor coverage had been a "very profitable" business line over the past 12 months.

“Last week Insurance Ireland announced premium supports for motor customers as part of the sector’s latest response to the Covid-19 crisis,” a spokesman for the lobby group said. “In developing the broad set of principles to inform this initiative, Insurance Ireland obtained comprehensive legal advice to ensure full compliance with competition policies.”

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The organisation is known to have taken its legal advice from Arthur Cox. A spokesman for the corporate law firm declined to comment.

Investigation

The Competition & Consumer Protection Commission (CCPC) opened an investigation in late 2016 into whether motor insurers and brokers had engaged in anti-competitive practices by openly signalling premium price moves. The case has not yet concluded.

The CCPC suggested on Monday it was monitoring the rebates move in the context of their legality, but said it was precluded from offering an opinion as to whether the move is consistent with EU and Irish competition rules. It said that, in general terms, it assesses these matters in the context of “the scale of potential consumer detriment”. The commission is the State’s consumer watchdog as well as the competition regulator.

“The CCPC is continuing to monitor any initiatives which bring businesses together to agree on prices or discounts which could potentially breach EU and Irish competition law and will engage with those businesses where relevant,” it said.

The commission said that it is a member of the European Competition Network, a network of 27 competition authorities within the EU. CCPC highlighted that network recently issued a statement to say competition rules are flexible enough to adapt to current market circumstances, but must still be applied to keep a level playing field.

Publicly known

Axa was the first of the major insurers to make its position publicly known on Monday. The Irish arm of the French insurer said it would set aside up to €20 million to offer its customers a rebate as a result of fewer claims associated with the nationwide shutdown caused by the Covid-19 pandemic.

The Axa provision equates to about €33 for each motor policy.

US-owned Liberty Insurance followed on Tuesday, saying said it had set aside €5 million for customer rebates by way of vouchers that will be available from June 8th. Sources say that based on Liberty’s estimated 10 per cent market share, customers will receive an average of €25.

AIG, which has a roughly 7 per cent market share, said it will not be introducing rebates, according to sources. However, it is understood the anticipated fall in claims will be reflected in their pricing when customers renew policies.

Spokesmen for FBD, Allianz and Zurich and a spokeswoman for RSA were not in a position to outline their plans on Tuesday.