Friday 23 March 2018

Watchdog warns motor insurers on talking up prices

Premiums across the board have shot up by 16pc in the past year
Premiums across the board have shot up by 16pc in the past year
Charlie Weston

Charlie Weston

Motor insurers have been warned against acting as a cartel after the consumer watchdog took issue with indications of industry-wide price hikes in the coming year.

The Competition and Consumer Protection Commission was responding to comments by the head of Insurance Ireland that motor rates are to rise by 25pc in 2016.

New figures from the Central Statistics Office show that motor-insurance premiums have already shot up by close to 27pc in the year to September.

This means that a €600 premium will have gone up by €160.

Now a letter from the commission has questioned whether Insurance Ireland has been sending anti-competitive signals to the market about price rises.

At a media briefing last month, the chief executive of Insurance Ireland Kevin Thompson indicated that motor premiums were due to go up by another 25pc in the coming year.

Insurance Ireland says it is the representative body for 95pc of the domestic market.

Mr Thompson said at the time: "We can only see further upward pressure on premiums."

Asked about the double-digit increases in premiums last year, he added: "We could see the same again next year."

The commission, which resulted from the merger of the Competition Authority with the National Consumer Authority, has questioned Mr Thompson's comments.

Asked about the letter to Insurance Ireland, a commission spokesman said: "Statements of this nature may result in a degree of unspoken co-ordination of pricing decisions and therefore may constitute a form of price signalling to industry participants."

The spokesman added that both Irish and EU competition law required pricing decisions by businesses to be made independently of competitors.

Any evidence of practices which remove the uncertainties that are key to a competitive market will give rise to competition law concerns, he added.

Chair of the commission, Isolde Goggin said: "The commission took the decision to write to Insurance Ireland to seek clarification around their actions and reported comments.

"The commission is acutely aware of the impact of increasing costs on consumers and we will continue to closely monitor developments and will, if necessary, take action to stop specific anticompetitive practices."

Mr Thompson had no comment to make.

Meanwhile, overall prices were 0.3pc lower in September when compared with the same month last year, the Central Statistics Office said.

On a monthly basis, consumer prices fell by 0.5pc in September from August.

Rents rose 1.2pc in September and are now up 10.3pc in the past year.

Irish Independent

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