OFT halts motor insurance price coordination probe

The OFT has closed its investigation into price coordination between motor insurers.

The watchdog announced that it has closed its probe after accepting formal pledges from six insurance companies and two IT software and service providers to limit data swaps between them.

The following insurers have agreed to the commitments after consulting with the OFT: Ageas, Aviva, AXA, LV=, RBSI, and Zurich. IT software and service providers Experian and SSP have also made formal commitments.

An OFT investigation identified an increased risk of price coordination among motor insurers using a specialist market analysis tool provided by Experian called Whatif? Private Motor.

The OFT said Experian tool allowed insurers to access not only the pricing information they themselves provided to brokers, but also pricing information supplied by other competing insurers.

The OFT warned the firms that, because insurers were able to access information about their competitors’ future pricing intentions, the information exchanged through WhatIf? Private Motor raised competition law concerns, in particular that it could potentially be used to coordinate on price.

The formal commitments address these concerns by ensuring that the companies will exchange pricing information through the analysis tool only if that information meets certain principles agreed with the OFT. These principles require the information, if less than six months old, to be anonymised, aggregated across at least five insurers and already ‘live’ in broker-sold policies.

Having accepted the commitments, the OFT has ended its investigation and will not be proceeding to a decision on whether or not the Competition Act has been infringed.

Clive Maxwell, executive director at the OFT, said: ‘The exchange of future pricing data between competitors has the potential to dampen competition, preventing customers from getting the best value.

“We have been able to address our concerns by accepting commitments that reflect the specific features of this market. These limit data sharing while ensuring a certain level of information remains available to potential new competitors, in particular smaller firms, to encourage entry into and healthy competition in the market.’