Insurance firms signalled price increases to reduce competition investigation alleges

CCPC allege insurance companies signalled price increases to each other
Insurance firms signalled price increases to reduce competition investigation alleges

The investigation focuses on a practice of ‘price-signalling’. This occurs when businesses make their competitors aware that they intend to increase prices, in turn causing further price increases across the sector. File picture. 

Motor insurance companies engaged in anti-competitive practices over a 21-month period between 2015 and 2016, the preliminary findings of an investigation by the Competition and Consumer Protection Commission (CCPC) has alleged.

The alleged anti-competitive cooperation 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. 

The CCPC said their findings are provisional and no conclusion should be drawn at this stage that there has been a breach of competition law.

AIG Europe, Allianz, AXA, Aviva, FBD, Brokers Ireland (formerly the Irish Brokers Association) and AA Ireland are under investigation into suspected anti-competitive practices in the provision of private motor insurance. The investigation focuses on a practice which is commonly referred to as ‘price-signalling’. This occurs when businesses make their competitors aware that they intend to increase prices, in turn causing further price increases across the sector. 

The CCPC said price signalling can happen in public, through announcements or comments on prices, or in private through direct contacts between companies. 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.

In the course of the investigation, the CCPC said it 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. 

The CCPC has now issued preliminary findings to the insurance organisations setting out its position that it has reasonable grounds to suspect that a breach of the law has occurred. 

The companies now have the opportunity to consider and respond to the preliminary findings and to offer commitments regarding their future behaviour.

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