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Hopes raised for cheaper car insurance after inquiry by EU

Extra.ie logo Extra.ie 01/07/2022 Ronan Smyth

Insurance Ireland will be subjected to ten years of supervision by the European Commission to ensure it complies with commitments it made to resolve an investigation into a potential breach of EU competition law.

In July 2017, the Insurance Ireland offices - covering over 90% of the motor vehicle insurance market here - were raided as part of an inquiry into the Irish motor insurance market.

In 2019, the European Commission opened a formal investigation into Insurance Ireland's conduct for a possible breach of EU competition law. The allegations centred around access to Insurance Ireland's Insurance Link information exchange system, which contains information useful for detecting and combating fraud in the Irish motor vehicle insurance market.

Insurance Ireland will be subjected to ten years of supervision by the European Commission to ensure it complies with commitments it made to resolve an investigation into a potential breach of EU competition law. Pic: Shutterstock © Provided by Extra.ie Insurance Ireland will be subjected to ten years of supervision by the European Commission to ensure it complies with commitments it made to resolve an investigation into a potential breach of EU competition law. Pic: Shutterstock

It also allows insurers to better assess customers' risk profiles and consequently to price insurance policies for motor vehicles. However, insurance reform advocates have said the EU Commission 'pulled its punches' in this case given the fact that no sanctions were issued. Peter Boland, of the Alliance for Insurance Reform, said: 'The European Commission appears to have pulled its punches by not publishing any findings regarding the significant concerns it raised with regard to the operation of the Insurance Link claims database in its Statement of Objections last year.

'Instead, it has done a deal with Insurance Ireland that sees the incumbent insurers' representative body retain control of Insurance Link, despite its concerns of last year. Having said that, if Insurance Ireland operates the new deal in good faith and the commission rigorously enforces it, it may yield a big opportunity to the department of finance to use the claims database as a selling tool to entice new underwriters, therefore increasing competition and ultimately reducing insurance premiums.'

The European Commission said it has made commitments offered by Insurance Ireland legally binding under EU antitrust rules. The organisation will now be legally compelled to ensure fair and non-discriminatory access to its Insurance Link information exchange system. Margrethe Vestager, European commissioner and executive vice-president in charge of competition policy, said these commitments will 'restore the level playing field in the Irish motor insurance market and ease the entry of new players'. She added: 'As a result, consumers may benefit from a larger choice of suppliers.

Margrethe Vestager, European commissioner and executive vice-president in charge of competition policy, said these commitments will 'restore the level playing field in the Irish motor insurance market and ease the entry of new players'. Pic: Olivier Matthys/Pool/AFP via Getty Images © Provided by Extra.ie Margrethe Vestager, European commissioner and executive vice-president in charge of competition policy, said these commitments will 'restore the level playing field in the Irish motor insurance market and ease the entry of new players'. Pic: Olivier Matthys/Pool/AFP via Getty Images

'This is a good result since today's economy increasingly relies on data sharing and access to data has become key in many markets.'

In June last year, the European Commission said it was of the view that Insurance Ireland 'arbitrarily delayed or in practice denied access of nonmembers' to the Insurance Link system, which had the effect of restricting competition in the Irish motor vehicle insurance market.

The commission said that by restricting access to its platform, Insurance Ireland placed certain firms at a competitive disadvantage compared to its members who had access to the platform. This acted as a barrier to entry, particularly for insurers based in other member states, ultimately reducing the possibility of more competitive prices.

Insurance Ireland CEO Moyagh Murdock. Pic: Leah Farrell/RollingNews.ie © Provided by Extra.ie Insurance Ireland CEO Moyagh Murdock. Pic: Leah Farrell/RollingNews.ie

Under its commitments, Insurance Ireland said: it will make access to the system independent of membership to the organisation; it will change the access criteria and make them fair, objective, transparent and non-discriminatory to be applied to all applicants; a new application procedure for access will be produced and it will be handled by an operationally independent application officer.

The commitments will be in force for ten years under the commission's supervision.

Insurance Ireland CEO Moyagh Murdock said: 'Insurance Ireland notes that the European Commission has not found that Insurance Ireland has infringed competition law.' She added: 'We have cooperated fully and worked constructively with the European Commission over the course of its investigation to allay concerns raised in relation to Insurance Link, and we are pleased that the commission has decided to accept the commitments and conclude its investigation.'

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