Calls made for urgent law changes to prevent car insurance market ‘cartel’

Urgent legislative changes have been called for to prevent cartel-type operations in the motor insurance industry.

It comes as a major investigation by the European Commission into motor insurance here is focusing on allegations the industry has created obstacles for new players to enter the market. Following a series of raids last year, investigators are now analysing whether foreign companies are facing barriers to entering the Irish market.

The Alliance for Insurance Reform called on the Government to make urgent legislative changes to force more competition and transparency in the industry.

The Alliance, which is a pressure group of businesses and charities seeking reform of the insurance sector, said the market here was restricted.

After dawn raids last year, European Commission investigators are now probing claims a new insurer coming into this market has to be nominated by an existing player to join lobby group Insurance Ireland. Membership gives access to various databases.

But such a situation gives rise to competition concerns.

Investigators from the European Commission seized documents from Insurance Ireland in the IFSC in Dublin last year.

However, Insurance Ireland insists it is fully compliant with competition law. The focus of the EU probe is whether membership of Insurance Ireland is restricted.

Being a member of Insurance Ireland gives access to databases which allows companies to see information on penalty points, driver licences and claims history.

Alliance spokesman Peter Boland said allegations of restricted access to the insurance market were not surprising.

“It is remarkable that such a valuable market, worth over €2bn, is controlled by so few underwriters, with 90pc of the motor insurance market controlled by six companies and 80pc of business insurance controlled by six also.”

He claimed the insurance industry was operating under a “cloak of secrecy” and was resisting attempts by the Government to set up a national claims database.

“Right now the industry in putting up fierce resistance to any elements of the new national claims information database that would shed some light on their practices, while happily cherry-picking the elements of the new database that will reduce their costs.”

Mr Boland called on junior finance minister Michael D’Arcy to face down vested interests and force the setting-up of the claims database.

And he claimed that the Central Bank was hindering consumers after abolishing the so-called ‘Blue Book’. This meant there is now no useable data available on the industry.

Insurance Ireland denied it was restricting new insurers coming into this market.

A spokesperson said it had never refused membership of the association.

In 2012, Insurance Ireland’s membership included 12 companies providing motor insurance By last year, this had increased to 18, it said. It said databases it operates were opened to non-members and members of Insurance Ireland.

“Insurance Ireland has co-operated fully with the European Commission in its enquiries and is confident its practices are fully compliant with competition law,” it said.

It said the European Commission was in an information- gathering phase and had not made any findings or raised any objections in respect of membership of Insurance Ireland.

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