OFT eases commitments for motor insurers

The Office of Fair Trading (OFT) is proposing amendments to commitments offered by a number of motor insurers, following its investigations aimed at addressing competition concerns and subsequent agreements with insurers, set out in January.

By subscribing to an analysis tool, seven insurance companies are able to access their own pricing information provided to brokers, plus pricing information supplied by competing insurers.

The tool is provided by an IT company using information from a second IT company, and the OFT concluded that because of the nature of the exchange, there was an increased risk of price coordination.

However, the watchdog is now minded to reduce the age of the data that can be shared from 36 months to six months.

It believes the shorter period will ensure the right level of information remains available to potential new competitors, in particular small competitors, and encourage entry into the market.

Other commitments will stand, including the requirement that pricing information must:

(i) be anonymised and aggregated across at least five insurers; and

(ii) not be supplied to insurers until prices are already “live” in policies sold by brokers.

A consultation on the proposed amendment will close on 28th October 2011.

Last month, the OFT issued a call for evidence on motor insurance costs, acting on reports that comprehensive car insurance premiums have risen by as much as 40% in a year.

The watchdog wants to identify consumer and competition issues and is particularly interested in reports that car insurance premiums in Northern Ireland are significantly higher than in the rest of the UK.

Insurers and others can submit their views on: the role of price comparison sites; the provision of credit hire replacement vehicles to drivers who are involved in accidents that are not their fault; insurance companies’ use of panels of approved repairers, and ancillary products that are sold by insurance companies in addition to standard motor insurance cover.

Tags: competition, information exchange, motor insurance, Office of Fair Trading

Category: Car Insurance News, Insurance News