T he road to lowering insurance costs in Ireland is a long and winding one. The latest episode is an agreement signed by four insurers and broker AA Ireland, following an investigation by the Competition and Consumer Protection Commission (CCPC). This found evidence of so-called price signalling by companies in relation to motor premium increases – in other words potential collusion in letting competitors know when prices were going to rise. In turn this blunts competition as companies can increase prices without fear that they will be out of line and lose business.
This is no technical misdemeanour. In markets where there are a small number of big companies there is always the possibility of this kind of activity, as it can help support profits. Consumers need companies competing with each other for business, not a cosy cartel agreeing when prices will go up. The companies – while claiming they did not engage in anti-competitive behaviour – have agreed to strengthen their internal compliance procedures. It goes without saying that this needs close monitoring.
It also also concerning that Brokers Ireland, the body which represents many in the broking sector, has not signed up. Many consumers rely on brokers to find them the best deal.
Consumer regulation has often fallen between stools in Ireland over the years, including in the financial sector where the Central Bank has an important role but so – in some cases – does the CCPC. After a number of companies went bust in the insurance sector around and just after the financial crash, the Central Bank’s focus was on boosting solvency and reserve levels. Consumer interests appear to have taken second place.
It is welcome that the CCPC is pushing ahead with its investigations into the insurance sector and will have more powers in the years ahead. It is part of a wider story of trying to cut insurance costs, including reforming personal injury awards and seeking to reduce legal costs. It remains to be seen if, and by how much, this might be reflected in lower premiums. And following the CCPC investigation, insurance companies need to have a long and hard look at themselves. Their advertising talks of putting customers first. Their practices reflect other priorities.