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An investigation by the Competition and Consumer Protection Commission has found that five insurance companies, an insurance industry trade association and an insurance broker allegedly engaged in anti-competitive cooperation.
This took place over a period of 21 months during 2015 and 2016.
In its preliminary findings, JPAC named companies such as AIG Europe, Allianz, AXA Insurance, Aviva Insurance, FBD Insurance, Brokers Ireland, formerly the Irish Brokers Association, and AA Ireland.
The alleged anti-competitive cooperation consisted of public announcements of future auto insurance premium increases, as well as other contacts between competitors.
All of this reduced the levels of competition between the parties, the Commission said.
JPAC said its findings are tentative and no conclusion should be drawn at this stage that there has been an actual competition law violation.
In 2016, the Commission launched an investigation into alleged anti-competitive practices in the provision of private automobile insurance in the State.
The activities under investigation include a practice commonly referred to as “price signaling”.
This occurs when companies inform their competitors that they intend to increase prices, which in turn causes further price increases across the industry.
Price signaling can occur in public, through price announcements or comments, or privately through direct contacts between companies.
If a company knows that its competitor is raising prices, it can be encouraged to raise prices as well, as its customers are less likely to move to its competitor, JPAC said.
The CCPS said the named companies now have an opportunity to consider and respond to their preliminary findings.
He said he will “carefully consider” any response before deciding whether to initiate civil court proceedings or take some other course of action.
In a statement, the JPAC said it acts to protect consumers and uses its legal powers to end anti-competitive practices.
“Price signaling and other types of anti-competitive cooperation between competitors ultimately lead to higher prices for consumers,” he said.
“These practices are particularly harmful to consumers when they occur in sectors such as private auto insurance, where motorists are required by law to purchase coverage and cannot avoid price increases,” he added.
Ireland brokers to challenge JPAC’s findings
Brokers Ireland said it strongly rejects JPAC’s preliminary findings regarding price signaling during 2015 and 2016 and would vigorously challenge them.
Brokers Ireland was formed in 2017 when the Irish Brokers Association merged with the Professional Insurance Brokers Association (PIBA).
In a statement, Brokers Ireland said there was a prolonged “soft period” (falling premiums) in the auto insurance market, which lasted after the last recession.
But he added that for 2013 there was a turnaround with diminished capacity in the insurance industry due to the failure of several insurers in the Irish auto insurance market, a massive recapitalization of the Irish branch of an international insurer and the impending enforcement . of new regulations.
“By 2015, increases in auto insurance premiums had become a frequent topic of conversation at the dinner table and general comment. The IBA, reacting to public interest, participated in this debate,” he added.
“Regardless of the merits of this, it cannot be said, to be fair, that the actions of the IBA have caused or contributed to increasing the cost of auto insurance,” said Diarmuid Kelly, CEO of Brokers Ireland.
“The bull cycle was firmly in action at this point, due to factors completely outside the IBA’s sphere of influence,” he added.
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