Potential entrants to the Irish insurance market are being deterred by lack of access to vital information, the Competition Authority said yesterday.
Publishing the preliminary findings of a study of the Republic's non-life insurance market, the authority said there were 578 insurers authorised to sell business in Ireland. However, it states that just 10 players hold 96 per cent of the market, while many others are not attracted to doing business here.
Authority chairman Dr John Fingleton said the study had identified one key barrier to entering the Irish insurance market. He pointed out that underwriters needed information to be able to price risk in a given market, and added that the availability of this information helped determine the number of suppliers.
"The Irish insurance industry shares data, but these data are not available outside the industry, raising the cost for people who want to enter the market," he said. The Irish Insurance Federation (IIF) collects the information and distributes it to member companies.
The report itself states: "the fact that data available to incumbents is not available to potential entrants therefore creates a cost asymmetry that amounts to a barrier to entry".
The report adds that the problem is aggravated by the late publication of the information that insurers are legally obliged to provide to the State.
This information, published in the Department of Enterprise, Trade and Employment's "blue book", gives a snapshot of firms' financial position and ability to meet current and future claims.
Dr Fingleton said that the latest year for which this information was available was 2002. He argued that this put potential entrants at a disadvantage. "This is a problem when you consider that insurance is a reasonably fast-moving market where you see prices move around quite a lot," he said.
He added that some potential entrants had a problem with the requirement to contribute to the Motor Insurance Bureau of Ireland (MIBI) scheme to cover damage caused by uninsured drivers.
However, Dr Fingleton said the cost of this came to just 5 per cent of the total market.
He stated that consultation with the industry would focus on information gathering and distribution.
The report found "little or no evidence of price co-ordination in either motor or liability insurance markets in Ireland", despite widespread allegations to the contrary. It states that the industry is not susceptible to price collusion.
However, Fine Gael spokesman on Enterprise, Trade and Employment, Mr Phil Hogan said in a statement that he was amazed that the report found no evidence of anti-competitive practices in the wider insurance market.
"There is a clear case for further in-depth examination of the insurance market," he said.
The Irish Insurance Federation (IIF) welcomed the report. Its chief executive, Mr Michael Kemp, said the report "bears out what we have always known, that there is no cartel or price-fixing arrangement in operation in the Irish insurance market".
He pledged that the IIF would play a full part in the consultation process that is due to follow the report's publication.
