Feeds

Insurance and IT firms agree rules on sharing price details

Blabbing pricing intentions to each other looked fishy to OFT

The essential guide to IT transformation

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.

5 things you didn’t know about cloud backup

More from The Register

next story
True fact: 1 in 4 Brits are now TERRORISTS
YouGov poll reveals terrible truth about the enemy within
Hello, police, El Reg here. Are we a bunch of terrorists now?
Do Brits risk arrest for watching beheading video nasty? We asked the fuzz
Snowden on NSA's MonsterMind TERROR: It may trigger cyberwar
Plus: Syria's internet going down? That was a US cock-up
UK government accused of hiding TRUTH about Universal Credit fiasco
'Reset rating keeps secrets on one-dole-to-rule-them-all plan', say MPs
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
e-Borders fiasco: Brits stung for £224m after US IT giant sues UK govt
Defeat to Raytheon branded 'catastrophic result'
NBN Co claims 96 mbps download speeds for FTTN trial
Umina trial also delivers 30 mbps uploads, but exact rig used not revealed
Yes, but what are your plans if a DRAGON attacks?
Local UK gov outs most ridiculous FoI requests...
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
BYOD's dark side: Data protection
An endpoint data protection solution that adds value to the user and the organization so it can protect itself from data loss as well as leverage corporate data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
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?