Seven major motor insurance companies allegedly co-operated in anti-competitive behaviour which could drive up costs to consumers.
The Competition and Consumer Protection Commission (CCPC) issued preliminary findings to five insurers, an insurance industry trade association and an insurance broker.
These companies are AIG Europe S.A., Allianz PLC, AXA Insurance DAC, Aviva Insurance Limited, FBD Insurance PLC, Brokers Ireland, formerly the Irish Brokers Association and AA Ireland Limited.
The CCPC’s preliminary findings allege that these organisations engaged in anti-competitive cooperation over a 21-month period between 2015 and 2016.
However, the body stresses that the findings are provisional and no breach of competition law has yet been established.
Price fixing can take many forms. It harms both businesses and consumers. Know how to spot the warning signs. pic.twitter.com/exAZsPqQEO— CCPC (@CCPCIreland) September 16, 2020
The alleged anti-competitive cooperation consisted of public announcements of future private motor insurance premium rises as well as other contacts between competitors.
These actions reduced competition between the companies, the CCPC alleges.
In 2016, the CCPC, a statutory body established to enforce Irish and EU competition law and to protect consumers, began investigating suspected anti-competitive practices in the motor insurance industry.
‘Price-signalling’ - when a business lets its competitors know in advance that it plans to increase prices which can cause price increases across the sector - was one of the anti-competitive cooperation activities under investigation.
Anti-competitive practices in the motor insurance industry are particularly harmful to consumers because motorists are required by law to take out cover and cannot avoid price increases, the CCPC said.
Electronic material, extensive oral testimony and documentary evidence through witness summons hearings and meetings were gathered from the companies during the investigation which were then reviewed and assessed.
The relevant parties may now consider and respond to the preliminary findings and the CCPC will “carefully consider” any responses before deciding if it will bring civil court proceedings or take other actions.
The preliminary findings have been “strongly rejected” and will be "vigorously challenged” by Brokers Ireland, which was formed after the Irish Brokers Association, mentioned in the findings, merged with Professional Insurance Brokers Association (PIBA) in 2017.
The organisation said there had been a prolonged ‘soft period’ (falling premiums) in the motor insurance market following the last recession.
By 2013, “there was a change of course” after a number of insurers failed, tightening the market. This was accompanied by “a massive recapitalisation” of an international insurer’s Irish arm and the impending application of new EU regulations.
By 2015, the increases in motor insurance premiums had become a frequent subject of dinner table conversation and general comment, Brokers Ireland said.
“Whatever the merits of this, the actions of the IBA cannot, in fairness, be said to have caused or contributed to increasing the cost of motor insurance,” Diarmuid Kelly, Chief Executive of Brokers Ireland said.
“The upward cycle was firmly in action by this point, due to factors entirely outside the sphere of influence of the IBA.
“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.
“It is time for public policy to tackle the key area that will actually deliver lower premiums to consumers – the cost of claims,” he concluded.