Feeds

Insurance and IT firms agree rules on sharing price details

Blabbing pricing intentions to each other looked fishy to OFT

Intelligent flash storage arrays

Six insurance companies and two IT software and service providers have agreed to change the way price information for motor insurance is shared following concerns that previous practices were violating competition laws.

The Office of Fair Trading (OFT) said that the insurers shared price details about future motor insurance price intentions with brokers who in turn used a software company, SSP Ltd, to share the data on an information exchange service. Insurers could use the information exchange, provided by Experian, to check their prices against competitors' and meant they had the potential to use the software to "prevent, restrict or distort competition" through coordinated price setting agreements, the OFT said.

Ageas Insurance, Aviva Insurance, AXA Insurance UK, Liverpool Victoria Insurance Company, RBS Insurance Group and Zurich Insurance, as well as SSP and Experian, have all agreed binding commitments (77-page/582KB PDF) that limit the kind of information that can be published through Experian's software, the OFT said. The regulator had raised concerns that the companies could have been in breach of the UK's Competition Act in how the tool was being used.

"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," the competition regulator said in a statement.

"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," it said.

Under the UK's Competition Act companies are generally prohibited from establishing agreements with other UK trading firms that "have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom".

The OFT said that the agreement would stop the potential for price fixing whilst ensuring "healthy" competition in the market.

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

"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," Maxwell said.

Later this month the OFT is expected to publish its report into the rising cost of motor insurance premiums. In September the OFT said it wanted to find out whether motor insurance premiums had risen on average by more than 40 per cent and whether any the reasons for the reported increase threw up any consumer or competition issues that need to be addressed.

The regulator asked insurers and other market participants for their views on the role played by price comparison websites, the provision of credit hire replacement vehicles, insurers' use of panels of approved repairers and "add-on" products sold in addition to standard insurance cover.

Copyright © 2011, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

Choosing a cloud hosting partner with confidence

More from The Register

next story
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
NSA mass spying reform KILLED by US Senators
Democrats needed just TWO more votes to keep alive bill reining in some surveillance
'Internet Freedom Panel' to keep web overlord ICANN out of Russian hands – new proposal
Come back with our internet! cries Republican drawing up bill
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Driving business with continuous operational intelligence
Introducing an innovative approach offered by ExtraHop for producing continuous operational intelligence.
10 threats to successful enterprise endpoint backup
10 threats to a successful backup including issues with BYOD, slow backups and ineffective security.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?