exclusive Insurance price-fixing allegations to be probed by watchdog

A major investigation will be launched into the public liability insurance market by the country’s competition watchdog.

The Competition and Consumer Protection Commission (CCPC) will probe whether sharp or anti-competitive practices are resulting in businesses being ripped off.

In particular it will look at the role of brokers amid suspicions that some could be working in cahoots, the Irish Independent understands.

Soaring premiums have been blamed for putting a series of activities at risk including street festivals, farmers’ marts, tidy town efforts, children’s play centres and sports events.

The move is on foot of an intervention from Business Minister Heather Humphreys, who has promised the CCPC extra resources so that the issue can be prioritised. In correspondence seen by this newspaper, Ms Humphreys said insurance prices are now being raised as “a potential systemic threat to the very existence of many businesses”.

She advised the CCPC that concerns have been raised “on the roles of insurance firms and intermediaries (such as brokers) in, at times, very sharp increased levels of public liability premia”.

On July 17, the minister requested a report and recommendations by the end of the year. However, chairperson of the CCPC Isolde Goggin replied two weeks later saying such is the scale of research required it will take a minimum of a year to complete. It has been agreed the competition watchdog will have its resources ‘beefed up’ so the issue of public liability insurance can be specifically looked at.

A source close to the minister said: "The insurance industry in this country seems to think it is beyond reproach. The CCPC has necessary statutory powers to find out what's going on and the industry is legally obliged to co-operate."

Rising premiums have been blamed for putting a series of social and business activities at risk. In the past two years alone, 75 street festivals have collapsed due to unsustainable rises in public liability insurance costs, according to the Association of Irish Festivals and Events.

And retailers estimate that on average, for every €1 allocated to an insurance claim, a business must make €100 in sales to recoup this outlay.

Ms Humphreys has asked the CCPC to examine "how that market operates, how competition works in that market and whether any practice or method of competition affects the pricing levels of public liability insurance within that market".

The Government has been under huge political pressure over rising insurance costs for some time now.

While primary responsibility for the problem lies with the Department of Finance, there is now an acceptance that businesses "feel like they're being fleeced".

"Businesses can't understand why they're seeing massive jumps in their premiums when they have had no claims," a source said.

"Shopping around doesn't seem to make a difference as the increases are across the board."

The Department of Business hopes by funding a study, the industry will take a review of its own practices.

Motor insurance has fallen in recent years after the initiative of a similar probe.

"There's also concerns that intermediaries, including brokers, benefit from increased premiums," a source said.

"All of this is completely unfair and the very least that businesses deserve is greater transparency, and an opportunity to shop around."

One concern raised by businesses is that if they get an insurance product from one broker, they can't get one from another.

The CCPC has powers under 2014 legislation to interview individuals, gather documentation and commission expert analysis on the market.

While its preferred approach is to gather information on a voluntary basis, the body does have the right to compel companies to co-operate if necessary.

In correspondence with the minister on July 29, the CCPC expressed concerns about whether the insurance industry will actively co-operate with its work.

Ms Goggin wrote "it is clear" there are issues within the insurance sector.

"Data is critical in competition in the insurance market," she said.

The CCPC has previously raised issues with the Government about the availability of data in the insurance sector and the willingness of the industry to provide information.

Ms Goggin advised the minister that buy-in from the industry would help the CCPC to reach conclusions quickly and deliver constructive recommendations for the Government.

But if necessary the CCPC "will use all of its statutory powers in order to deliver" because "any lack of co-operation will impact on the timelines for the study".

The CCPC said it is aware of the "economic significance of this market" and therefore it is "paramount that analysis of this complex market is robust and that recommendations to address the current market issues are credible and of value".

An ongoing investigation by the CCPC into the motor insurance industry, which is in its latter stages, will be kept separate from the new line of inquiry. The motor investigation began three years ago and has looked into whether motor insurers and brokers have engaged in anti-competitive practices by openly signalling premium price moves.

In it, the CCPC has had at least 55 witness summons hearings and obtained over 1.4 million emails and documents.