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European Commission says Insurance Ireland restricted competition and drove up prices on premiums

The European Commission accusations were made against Insurance Ireland this morning.

Image: Leah Farrell

Updated Jun 18th 2021, 3:28 PM

THE EUROPEAN COMMISSION has said Irish insurers breached EU antitrust rules by restricting competition in the Irish motor market. 

A statement issued this morning said the Commission took issue with certain conditions of access to the Insurance Link platform, a data sharing system, controlled by Insurance Ireland. 

Insurance Ireland is an association of insurance companies in Ireland. 

“The Commission considers that Insurance Ireland arbitrarily delayed or de facto denied access to the system to companies that had a legitimate interest in joining it, and that hurdles remain in place that might affect companies seeking to enter the Irish motor insurance market,” the statement said. 

The Commission’s preliminary view, outlined in its Statement of Objections, is that a lack of access to the Insurance Link database had the effect of placing companies at a competitive disadvantage on the Irish motor vehicle insurance market in comparison to companies that have access to the database.

“This affects negatively costs, quality of service and pricing. It also acts as a barrier to entry and thus reduces the possibility of more competitive prices and choice of suppliers,” it added. 

The Commission also cited the lack of access to the relevant data contained in Insurance Link, saying this also has an effect on cross-border trade between member states, resulting in the potential partitioning of the single market.

The sending of a Statement of Objections does not prejudge the outcome of an investigation.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said the situation has caused high prices in the Irish market.

“Motor insurance is a significant cost in the budget of every family and business. Access to data is key for insurers to evaluate the risk they take and to offer competitive contract conditions to customers,” she said.

“We have concerns that certain insurers and their agents were put at a competitive disadvantage because Insurance Ireland denied or delayed access to its data sharing system, compiling valuable information on insurance claims.

“This prevented competitive entry of new players and thus reduced Irish drivers’ choice of motor insurance policies at competitive prices. Non-discriminatory access to data sharing systems is important to foster competition in markets relying on data.” 

In a statement responding to the Commission, Insurance Ireland said that the claimed lack of access to Insurance Link was a preliminary view and wasn’t the final decision of the European Commission.

The association said it will now have an opportunity to respond to the Statement of Objections over the coming weeks.

“Over the last four years, Insurance Ireland has cooperated with the investigation of the European Commission and we will continue to do so through this stage of the process. We will now assess the points set out by the European Commission and we are confident that we can allay the European Commission’s perceived concerns,” it said.

In a press statement, the Minister of State with responsibility for Financial Services, Credit Unions and Insurance and Chairperson of the Office to Promote Competition in the Insurance Market, Sean Fleming said he “notes” the Commission’s preliminary findings.

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He also takes “note of the comments made by Insurance Ireland in this matter” and awaits the conclusion of the investigation.

“Separately, the Government continues its important work of reform of the domestic insurance sector,” the statement also said. “It is the Minister’s intention to bring forward new insurance legislation in the autumn.”

“Opening a formal antitrust investigation and sending a Statement of Objections does not prejudge the outcome of the investigations,” the Insurance Ireland statement said. 

Pearse Doherty, Sinn Féin spokesperson on Finance, said that the preliminary findings revealed “cartel-like” behaviour at the heart of the insurance industry.

“This is a scandal, and comes less than a year after the Competition Authority found that some of the biggest players in the Irish insurance industry, including AIG, Allianz, AXA, Aviva and FBD engaged in price-signalling between 2015 and 2016,” he said.

“Behaving like a cartel, the industry has effectively rigged the system against the interests of new entrants and consumers.”

Minister of State Sean Fleming

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