Watchdog says ‘reasonable grounds’ to suspect car insurers broke competition laws

The Competition and Consumer Protection Commission (CCPC) said that it has “reasonable grounds” to suspect that a number of Irish motor insurers broke anti-trust laws, almost four years after it began an investigation into whether firms were engaging in signalling premium prices to rivals.

The authority said on Thursday that the findings are provisional and that “no conclusion should be drawn at this stage that there has been a breach of competition law”.

The companies subject to the investigation include AIG Europe, Allianz, Aviva Insurance, Axa Insurance, FBD Insurance, trade association Brokers Ireland (formerly the Irish Brokers Association), and AA Ireland, an insurance intermediary.

“The preliminary findings allege that these organisations engaged in anti-competitive co-operation over a 21-month period during 2015 and 2016,” the CCBC said. “The alleged anti-competitive co-operation consisted of public announcements of future private motor insurance premium rises as well as other contacts between competitors, all of which reduced levels of competition between the parties.”

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Price signalling can happen in public, through announcements or comments on prices, or in private through direct contacts between companies, it said. If a business knows that their competitor is increasing prices then they may be encouraged to also increase prices, since their customers are less likely to move to their competitor.

Allianz said it disagrees with the preliminary findings and is “satisfied” that it “never knowingly participated in any efforts to prevent, restrict, or distort competition in the market”.

Axa Insurance said that it is “surprised and disappointed”by the outcome and said it “will be fully defending” its position with the agency.

Aviva said that it was considering the findings, while spokesmen for AIG and AA Ireland and FBD declined to comment.

Brokers Ireland said that the preliminary findings are “strongly rejected and would be vigorously challenged”. “With around a dozen and a half insurers and 300 insurance brokers operating in the State, competition is alive and well in the Irish motor insurance market,” said its chief executive, Diarmuid Kelly.

The CCPC said: “Price signalling and other types of anti-competitive co-operation between competitors ultimately lead to increased prices for consumers. These practices are particularly harmful to consumers when they occur in sectors like private motor insurance where motorists are required by law to take out cover and cannot avoid price increases.”

Premiums soared

Motor insurance premiums soared more than 70 per cent over three years before they peaked in 2016, according to Central Statistics Office data. Premiums have since come back. Insurers put down the price increases at the time to their efforts to recover sharp losses over a number of years amid rising claims and court awards.

Irish insurers racked up €757 million of losses over the four years to the end of 2016 from covering drivers, before returning to profit in 2017.

In the course of the investigation, the CCPC gathered a substantial amount of electronic material from relevant parties, as well as extensive oral testimony and documentary evidence through witness summons hearings and meetings, it said.

The authority said that the firms subject to the investigation now have the opportunity to consider and respond to the preliminary findings. It said that it will consider any responses before deciding whether to bring civil court proceedings or take another course of action for potential breaches of competition laws.

“As the investigation is ongoing, no further information or comment can be provided at this time,” it said.

European Commission

Separately, in May of last year, the European Commission started a formal investigation into whether Insurance Ireland, an industry body, has been operating a cartel by restricting access to a claims database.

However, EU sources said at the time that the commission had dropped a separate investigation into suspected anti-competitive practices in the market for insuring trucks and lorries in the Republic.