Insurance reform body criticises independent expert appointments

Insurance reformers and politicians challenged a deal by regulators to allow motor underwriters appoint their own independent experts to oversee compliance with competition law.

Motor insurers AIG, Allianz, Axa, Aviva, FBD and broker AA Ireland have agreed with State regulators to improve their compliance with competition rules following an investigation into suspected price manipulation.

However, news that the settlement with the Competition and Consumer Protection Commission (CCPC) allows the companies to appoint their own independent experts to ensure they are adhering to the deal has drawn criticism.

Peter Boland, director of the Alliance for Insurance Reform, warned that agreement "did not inspire any confidence" in the outcome of a process undermined by the weakness of the CCPC and Central Bank in protecting consumers.

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Pearse Doherty, Sinn Féin's spokesman on finance, argued that allowing the insurers to appoint their own external competition law experts to oversee compliance called into question the agreement's effectiveness.

He claimed the agreement exposed the weakness of the CCPC and its powers, adding that the commission’s decision not to take legal action was deeply regrettable.

Mr Doherty said that when lobby group Insurance Ireland “boasted” that none of the companies were found to have broken competition law, it forgot to mention that the CCPC had no power in this instance to make such a finding or issue any fine.

“The Government would also like the public to remain ignorant of the fact that the CCPC has called for these powers for a decade, and that the Government has missed a February deadline to transpose an EU directive that would provide for many of these powers,” Mr Doherty said.

He noted that the Bill, which will give the commission the powers it seeks should it become law, had not been published.

The CCPC confirmed on Monday that the agreement obliged the six businesses to appoint their own independent experts to oversee their compliance programmes.

However, the CCPC disagreed that it called into question the independence of the oversight.

“Not only is the oversight external to the parties but, importantly, an annual submission must be filed with the CCPC, to confirm compliance with the commitments,” said the regulator.

Additional information

The organisation added that it could demand additional information from each of the parties at any time to verify that they were upholding their side of the settlement.

“If the CCPC feels any of the parties are not fulfilling the requirements of their commitment agreement, it may be considered a breach of the agreement and the CCPC can take legal proceedings against the party,” the commission pointed out.

Regulators investigated suspected “price signalling”. This is where rival companies let each other know in advance that they are increasing charges, potentially prompting further price hikes across their industry.

Detailed public announcements by motor insurers of pending price increases in 2015 and 2016 sparked the inquiry. All the companies denied that they had engaged in anti-competitive behaviour.

The six businesses have agreed to appoint internal compliance officers who will investigate potential breaches of competition law and report to their boards.

Among other steps, they must put systems in place to detect any likely infringements.