Seven U.K. insurers including Aviva Plc, RBS Insurance Group Ltd. and RSA Insurance Group Plc agreed to limit the amount of data they share after an investigation into pricing practices by the Office of Fair Trading.
The insurers were found to be using computer programs that allowed them to view each other’s pricing data, the OFT said in a statement today. Ageas Insurance Ltd., Axa Insurance UK Plc, Liverpool Victoria Friendly Society, Zurich Insurance Plc as well as software providers Experian Ltd. and SSP Ltd. also agreed to the measures.
The probe “identified an increased risk of price coordination among motor insurers” using a market analysis tool developed by Experian, the OFT said in the statement. “The investigation potentially has wider implications as the Experian tool is just one of a number of similar products used throughout the insurance industry.”
The nine companies, including Experian and SSP, agreed they would limit their access to each other’s pricing information as a result of the investigation. The competition concerns were brought to the attention of the OFT by RSA, which has been granted immunity from prosecution, according to Louise Shield, a spokeswoman for the insurer.
None of the insurers or software companies was cited as breaching competition law or accused of price fixing by the OFT. They will in future exchange pricing information through the software only if it’s anonymous, the OFT said.
“We’re concerned that this could just be the tip of the iceberg,” said John Holmes, principal economist at consumer group Which? “The OFT must now widen its investigation to other parts of the insurance industry and impose significant penalties on any firms it finds to be engaging in anticompetitive behavior.”
The U.K. car-insurance industry has been raising prices in the past 12 months after making underwriting losses for the last 16 years. In 2010, insurers lost 1.6 billion pounds ($2.5 billion) because of higher personal injury claims, according to the Association of British Insurers.
In the 12 months to Sept. 30, the cost of annual comprehensive car insurance rose 39 percent to 792 pounds, the biggest annual jump recorded, according Automobile Association Ltd.
RSA, Aviva, RBS, Zurich, Axa and Ageas said they cooperated fully with the investigation and welcomed the proposals, which will increase transparency.
“As the OFT has made clear, it has not made a finding of an infringement of competition law today,” ABI said in an e- mailed statement. “We welcome the OFT’s proposal to consult on an approach that has been agreed with some motor insurance companies to ensure that there is no concern about any infringement going forward.”
Liverpool Victoria said it has nothing to add to ABI’s comment.
“We have worked constructively with the OFT during its investigation and are happy to give the proposed commitments,” Experian said in an e-mailed statement. SSP, which developed part of the Experian tool’s technology, said it cooperated fully with the investigation.
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