Motorists, households and businesses that have endured large increases in insurance costs in recent years may be forgiven for cheering the fact that European Commission has taken action, of sorts, at a time when political will to reform the industry appears to be losing momentum.
Almost two years after Commission officials raided Insurance Ireland's office in Dublin, the outgoing EU competition commissioner, Margrethe Vestager, announced on Tuesday that she has initiated a formal investigation into whether the organisation is operating a cartel by restricting access to a claims database it manages.
The database, Insurance Link, gives insurers and organisations that insure themselves, such as Dunnes Stores, the ESB and large county councils, access to information on the claims history of individuals. It's an important tool for insurers when they are asked to price a new policy – a point that Vestager has acknowledged. However, the EU is seeking to find out whether Insurance Ireland has unfairly prevented companies seeking to enter the market having access to the data pool – which would be a breach of competition rules.
Insurance Ireland has insisted the same criteria apply to any insurer, domestic or foreign, when it comes to gaining access to the database. It has said the whole point of Insurance Link is to combat insurance fraud and its effectiveness is only boosted by having as many users as possible.
While it is not yet clear what specific complaint led the EU to take its initial action in July 2017, the decision to launch a full-blown investigation signals it believes there is a case to be answered. It is likely to take years before there is a final outcome.
The Commission has made it clear its case is only against Insurance Ireland and not its members. However, Marco Hickey, head of the EU, competition and regulated markets team with law firm LK Shields, said that if Insurance Ireland did not have the funds to meet a monetary penalty, it must call on members to pay any shortfall.
The investigation has to run its course. But it must not be allowed to distract the Government from necessary reforms of the insurance industry – which are happening at too slow a pace.
Average court award for whiplash in this jurisdiction are 4.5 times higher than in the UK. However, a Bill that would lead to the setting up of a judicial council that would recalibrate awards in the courts remains logjammed in the Seanad, more than two years after it was first unveiled.
Looking to the bigger picture, the Government, which had to step in and load the cost of the failure of Malta-based Setanta Insurance and Gibraltar’s Enterprise Insurance in recent years onto the Insurance Compensation Fund, must push for a European authority to supervise the industry and ensure greater consistency in insurance protection schemes across the union.