Motor insurance premiums should fall with the introduction of a new car repair estimation system, according to the insurance industry and the Competition Authority.
The benefits of the new Glassmatix system are expected to be passed onto consumers after a consortium of the State's four top insurance companies signed an agreement with the Competition Authority not to fix the price of car repair costs or eliminate competition in the car repair services market once Glassmatix' is introduced.
The agreement with AXA Insurance Ltd, Allianz Ireland plc, Hibernian General Insurance Ltd and Royal & Sun Alliance Insurance plc, was published after a lengthy investigation by the Competition Authority into the use of Glassmatix.
The Glastsmatix computer system provides labour times for repairs based on recognised best practice and up to date prices for manufacturer parts. It is designed to replace previous methods of estimating car repair.
A complaint made to the Competitions Authority in 2001 raised concerns that the consortium may have used the Glassmatix system as a means to fix the price of car repair costs and thereby restrict competition in the market for car repairs.
The Competition Authority was concerned that cost benefits made by the consortium would not be passed on to car insurance customers in the form of lower premiums.
In a statement last night, the Authority said that in their opinion "any such co-ordination with respect to costs, if it were established, would also promote conditions conducive to collusion in setting motor vehicle insurance premiums".
The four insurers involved in the consortium account for between 65-70 per cent of the Irish car insurance market.
The Competition Authority and the consortium are now saying that insurance premiums should fall as a result of the introduction of Glassmatix.
The agreement is a boost for the Tanaiste and Minister for Enterprise, Trade and Employment, Ms Harney, who has campaigned for lower car insurance premiums.
"This is a good result for both consumers and business," said Dr Paul Gorecki, director of the Competition Authority's monopolies division. "There is the potential for consumers to gain from lower insurance premiums as the companies benefit from cost savings in the repair of motor vehicles."