One of the key elements of the insurance reform programme the Tánaiste launched on 25 October 2002 is to investigate competition in the Irish insurance market with a view to establishing what actions are needed to improve competition.
The aim of the joint study undertaken by the Department and the Competition Authority is to identify and analyse barriers to entry and limitations on rivalry in the insurance marketplace. The bulk of the study was completed in 2003 and a preliminary report and consultation document on competition issues in the non-life insurance market was published on 18 February 2004. Following a two-month consultation period, a final report will be published which will contain recommendations based on its findings.
The insurance reform programme mentioned above contains a wide-ranging set of insurance reforms that have the potential to make the Irish market generally more attractive to insurers, thus encouraging the entry of new players into the market and leading to downward pressure on premia. Improvements in the functioning of the Irish insurance market will reduce industry costs and make the market more attractive to other firms that have not had any previous presence in Ireland. Competition has a vital role to play in ensuring that these cost reductions are fully passed on to the buyers of insurance.
Many of the other measures contained in the Motor Insurance Advisory Board's recommendations will have the effect of encouraging competition, including those relating to transparency and the provision of information to consumers. Examples of recommendations that have been implemented to promote competition include the provision of 15 days' notice at renewal time for motor insurance policies, which give consumers the opportunity to shop around; regulations that prescribe that no claims bonus documentation be provided with renewal notices to assist consumers who wish to shop around; the provision of comparative tables of insurance quotes which IFSRA now publishes on its one-stop website on a three-monthly basis; and the incorporation of the principle of acting against the public interest in the Competition Act 2002.
Codes of practice in the insurance industry, IFSRA and the IIF, now require insurers who refuse to quote for any particular risk to state their reason in writing, upon request. The Irish Insurance Federation in its code of practice has agreed a code of conduct with its member companies on anti-competitive behaviour, subject to any more formalised measures which may be adopted by IFSRA under competition law.
The Competition Authority has a duty to review all further insurance mergers in the interests of the economy, with appropriate reference to IFSRA. The process of consultation seeks to protect the interests of specific policyholder groups, since the effects of mergers may warrant consideration below issues of the market as a whole.
Additional information not given on the floor of the House
Over the coming months, I intend to meet representatives of potential new entrants to the market. I have made it known that I am interested in talking to any such potential entrants.