Last week, after a 5 year investigation into anti competitive behaviour in the insurance industry, an agreement was reached between the main insurers and the Competition and Consumer Protection Commission (CCPC) for an expert to be appointed to oversee their compliance with competition law. Whilst government has welcomed the outcome, many critics say the measures do not go far enough and that nothing will change with these profiteering companies. 

The CCPC was investigating what was described as cartel-like behaviour across the motor insurance sector. They found that six major insurers, AIG, Allianz, Axa, Aviva, FBD, and the AA had engaged in a practice called price signalling. This differs from price fixing and involves companies issuing public statements about the need to increases premiums and thus effectively signalling to their competitors that they are about to raise prices and it is also safe for them to do so. 

Brian McHugh, Member of the CCPC with responsibility for Competition Enforcement and Mergers, said, "Businesses are required to set their prices independently. Any form of pricing statements and suspected coordination that could manipulate future pricing, raise serious concerns under competition law, as this can impact on competition and ultimately the price consumers pay. The potential for consumer harm is particularly high in the motor insurance market, as consumers cannot avoid taking out a policy if they are to drive legally."

He added, "All of the parties denied that they were in breach of competition law and pointed to their existing compliance programmes and measures. However, the CCPC did not accept that adequate compliance measures were in place in these businesses.” 

These insurers have now agreed to sign up to a new compliance structures, with more robust oversight and greater protection for internal 'whistleblowers' who highlight potential breaches of competition law. 

This has been welcomed in some circles. However, the fact that the independent expert will be paid for and appointed by insurers has been sharply criticised. 

Peter Boland, director of the Alliance for Insurance Reform, said the agreement “did not inspire any confidence” and only served to highlight the weakness of the CCPC and Central Bank in protecting consumers.

Sinn Féin’s spokesman on finance, Pearse Doherty, also believes allowing the insurers to appoint their own external competition law experts, brought the agreement into serious question. 

Another aspect of the findings causing alarm, is that Brokers Ireland, the body for insurance and financial brokers, declined to enter into a similar agreement and rejected the CCPC’s allegations against it. 

After a five year investigation the conclusion and the agreement reached does appear to be a little underwhelming. The findings are little more than a rap over the knuckles for the big insurers and you have to question if it will bring about any real change. Meanwhile motorists continue to pay sky high insurance costs and there are few signs of this relenting.