Wednesday 23 October 2019

EU launches formal probe into Insurance Ireland

EU commissioner Margrethe Vestager. Photo: REUTERS
EU commissioner Margrethe Vestager. Photo: REUTERS

Charlie Weston and Wayne O'Connor

THE European Commission has opened a formal competition probe into Insurance Ireland.

It is investigating whether restricted access to its Insurance Link database system may restrict competition, in breach of EU rules.

It follows dawn raids on Insurance Ireland and a number of brokers here in July 2017.

Insurance Link provides the claims history of individuals who are seeking to take out a new policy with a new insurer.

The database is run by Insurance Ireland, the representative body for the industry here.

The member companies contribute insurance claims data to the database on an ongoing basis.

Commissioner Margrethe Vestager, in charge of competition policy, said: “Insurance is essential for all car drivers in Europe.

“We are investigating whether companies wishing to offer their services on the Irish motor insurance market may have been unfairly prevented from accessing a data pool managed by Insurance Ireland for its member companies.

“This could potentially reduce Irish drivers' choice of motor insurance policies at competitive prices.”

The EU Commission said the purpose of the Insurance Link system is to facilitate the detection of potentially fraudulent behaviour by insurance claimants, and to ensure the accuracy of information provided by potential customers to insurance companies and/or their agents.

The Commission does not question that data pooling arrangements can contribute to effective competition. 

The participation in and access to a data pool by insurance service providers may directly benefit consumers in terms of ensuring more suitable products and competitive prices.

In the case of Insurance Ireland, the Commission's investigation will assess, in particular, whether the conditions imposed on companies wishing to participate in and access the Insurance Link database may have had the effect of placing these companies at a competitive disadvantage on the Irish motor insurance market in comparison to companies already having access to the database.

If proven, the practices under investigation may breach EU competition rules, which prohibit agreements between companies that prevent, restrict or distort competition within the EU’s Single Market.

Insurance Ireland said it is cooperating fully with the European Commission in its enquiries and is confident its practices are fully compliant with competition law.

Fianna Fáil's finance spokesperson Michael McGrath said it is important the probe uncovers if any alleged uncompetitive practices had an impact on insurance premiums.

It comes after the European Commission confirmed it is investigating whether access to Insurance Ireland’s Insurance Link database system may restrict competition and breach of EU rules.

The database is run by the representative body for the industry. It provides the claims history of individuals who are seeking to take out a new policy with a new insurer.

“I think this is evidence of dysfunction within the Irish insurance market, which I think extends far beyond the motor insurance area,” said Mr McGrath.

He added: “I think people who have been paying skyrocketing motor insurance premiums over the last number of years will want to know whether or not there are barriers to entry for other insurance companies coming in to the Irish market.

“It is essential that we have an open market where new entrants can come in and can compete on a level playing field. We have been between this issue for a number of years and have been seeking regular updates from both the European Commission and the Competition and Consumer Protection Commission as well, especially since the raids that took place in the summer of 2017.

“I think the fact the European Commission has now elevated this probe to the status of a formal investigation means they believe there is a case to answer.”

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