Watchdog hopes to get additional powers to regulate motor insurers

Six insurers give binding undertakings to reform their competition law compliance

The agreement with the insurance companies follows an investigation by the regulator, which suspected that insurers were ‘signalling’ price information to other players in 2015 and 2016. Photograph: iStock

The agreement with the insurance companies follows an investigation by the regulator, which suspected that insurers were ‘signalling’ price information to other players in 2015 and 2016. Photograph: iStock

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Competition regulators hope to get new powers this year after securing agreement from leading motor insurers that they will comply with price-fixing laws.

The Competition and Consumer Protection Commission (CCPC) will confirm on Friday that it has legally binding pledges from motor insurers AIG, Allianz, Axa, Aviva, FBD and broker AA Ireland to reform their competition law compliance.

Industry body Brokers’ Ireland refused to sign the same deal. Chief executive Diarmuid Kelly said the CCPC had failed to prove any competition law breaches by the Irish Brokers Association (IBA), which his organisation took over in 2017.

The agreement with the insurance companies follows an investigation by the commission, which suspected that insurers were “signalling” price information to other players in 2015 and 2016 by publicly announcing details of proposed premium increases.

Regulators feared the practice allowed companies to see other’s pricing plans, allowing them to fix their charges accordingly, which the commission said was potentially a breach of competition law.

Brian McHugh, CCPC member responsible for competition enforcement, welcomed the pledge by the six companies, which account for 70 per cent of the motor insurance market.

However, the regulator has written to the Central Bank highlighting concerns about the insurance industry’s culture and the repeated interventions needed to address issues in the sector.

The investigation was the CCPC’s third examination of Irish insurers. It is understood that the watchdog will continue to monitor the sector and will act again if it sees any evidence of anti-competitive behaviour.

Meanwhile, sources say the Competition (Amendment) Bill, 2021, giving the regulator extra powers, could become law by the end of this year.

Among other measures, this will allow the commission to fine companies for breaches of competition law.

The regulator has been seeking this power for some time. Currently, only the courts can find that an organisation has breached the law.

Commenting on the agreement, Mr McHugh said businesses were required to set their prices independently.

He warned that any form of suspected co-ordination that could manipulate future pricing raised serious competition-law concerns.

“The potential for consumer harm is particularly high in the motor insurance market as consumers cannot avoid taking out a policy if they are to drive legally,” Mr McHugh said.

Anti-competitive co-operation

The CCPC issued preliminary findings in September 2020 that all seven parties had engaged in anti-competitive co-operation over 21 months in 2015 and 2016.

All denied this and pointed to their compliance programmes. “The CCPC did not accept that adequate compliance measures were in place in these businesses, as robust compliance programmes would have identified and flagged the behaviours of concern that were under investigation,” said Mr McHugh.

The six companies agreed to comprehensive compliance changes across their businesses to prevent breaches of competition law and support whistle-blowers who may highlight potential offences.

According to Mr McHugh, independent experts will monitor the companies’ compliance programmes. Failure to adhere to the agreement could result in the CCPC taking the offending company to court, he added.

Brokers’ chief Mr Kelly said his organisation strongly rebutted all CCPC allegations against the IBA when the regulator issued preliminary findings in September.

“This detailed rebuttal was made in November 2020 and remains unanswered by the CCPC. Brokers Ireland did not and does not accept that the alleged conduct of the IBA contravened any aspect of competition law,” he said.

Consequently he argued that parties with legitimate points were “forced to consider unworkable programmes, without the CCPC dealing with the points made in rebuttal”.

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