European regulators have charged Insurance Ireland with restricting competition in the motor insurance market and thus breaching competition rules. In a report by the Irish Independent, it was estimated that the move by the European Commission (EC) could potentially lead to multi-million euro fines.
As an association of companies active in the Irish insurance sector, Insurance Ireland covers over 90% of the Irish motor vehicle insurance market, with members including FBD Insurance, RSA, Aviva and Zurich.
Insurance Ireland has previously stated that the probe was against it alone and not its members, and therefore the maximum fine that could be imposed would be 10% of its own turnover. However, The Irish Independent’s report noted that legal sources who specialise in competition law have agreed that the EU Competition Directorate can fine organisations - if it finds against them – 10% of their worldwide turnover.
The EC had opened its probe into Insurance Ireland’s data-sharing system in May 2019 and its findings follow a two-year investigation after claims about “cartel-like activities” by Irish insurers were credited with keeping competition out of the market. The EC has said that its preliminary view is that Insurance Ireland breached EU antitrust rules by restricting competition in the Irish motor vehicle market.
In a statement, the EC noted: “The European Commission’s preliminary findings show that Insurance Ireland arbitrarily delayed or de facto denied the access of certain insurers and their agents to Insurance Link. Since at least 2009 and until today, access has been linked to membership in the association.”
The EC also highlighted that Insurance Ireland sets the conditions of access to Insurance Link, which is made up of a non-life insurance claims data pool and a data-request facility for claims. The Commission said that Insurance Link assists its users (firms offering motor vehicle insurance) in better assessing risk and in detecting and defending themselves against potential fraud.
“The commission’s preliminary view, outlined in its statement of objections,” the EC said in a statement, “is that lack of access to Insurance Link has 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. Lack of access to the relevant data contained in Insurance Link also has an effect on cross border trade between member states, resulting in the potential partitioning of the single market.”
Executive vice-president Margrethe Vestager, in charge of competition policy, said: “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.
“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.”
She also highlighted that non-discriminatory access to data sharing systems is important to foster competition in markets relying on data.
In a statement on its website, Insurance Ireland recorded the decision of the EC and said it is important to note that the Statement of Objections sets out the EC’s preliminary views only and was not the European Commission’s final decision. It stated that Insurance Ireland 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,” the association said. “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.
“Insurance Ireland notes the European Commission’s statement states that ‘Opening a formal antitrust investigation and sending a statement of objections does not prejudge the outcome of the investigations.”