Ms Karen O'Leary:

I am a member of the Competition and Consumer Protection Commission. I also have responsibility for criminal enforcement and corporate services. I am joined by fellow members, Mr. Patrick Kenny, who is responsible for competition enforcement and advocacy and Mr. Fergal O'Leary, who is responsible for consumer enforcement, communications and market insights divisions. Our chairperson, Ms Isolde Goggin, is unfortunately unable to be with us today.

We share the concerns of consumers, this committee and the Government about the rising cost of motor insurance. Our consumer helpline has received 1,466 queries since the middle of last year about motor insurance, 227 of which were specifically about increasing motor insurance premiums. We have closely followed this committee’s deliberations and that of the Department of Finance working group. We are grateful for the opportunity to discuss our work and views.

I will briefly outline our structure, functions and work in the broader insurance sector. The committee will be aware that the Competition and Consumer Protection Commission, CCPC, consists of a chairperson and membership structure which together form a collegiate decision-making commission. In addition, each member has individual executive responsibilities. The CCPC is the statutory body responsible for enforcement of competition and consumer protection legislation across the economy. With a few important exceptions, such as groceries, our economy-wide remit means that we do not regulate individual sectors. In relation to the financial services sector, Government policy means that, along with consumer protection, the Central Bank imposes the sectoral rules and codes of conduct under which financial services providers and the market must operate. The CCPC enforces competition legislation which, in contrast to regulation, provides for intervention after a breach has happened. We also have a specific remit in terms of personal finance information and education for consumers.

Sectoral regulators such as the Central Bank are usually the first port of call to address sectoral issues, given their in-depth expertise and sector-specific powers. The exception to this is where the CCPC's remit and powers specific to the problems at hand, such as competition enforcement and public awareness, are not replicated by the sectoral regulator.

The CCPC has been active in the insurance sector over the years. In 2005, the then Competition Authority undertook a major study which identified a number of reasons competition among insurance companies was not as strong as it could be. For example, consumers were slow to switch to another insurer. The study recommended greater disclosure of risk related data as a lack of data acts as a barrier to entry. New entrants would find it extremely difficult to assess the overall market risk without accurate data. We have on several occasions investigated complaints relating to alleged anti-competitive behaviour by industry participants. These included an investigation into whether private motor insurance companies had regular access to competitor future pricing information through a shared IT system. This was resolved by means of legally binding agreements and undertakings obtained from the relevant parties involved. As part of our statutory personal finance education role, we provide information to consumers to help them make informed choices. Along with conducting consumer awareness campaigns, we publish periodic insurance surveys which help consumers become aware of the options available to them and we regularly publish switching reports to encourage consumers to find the best deal available to them.

In regard to the open investigation, in October 2015 we engaged with Insurance Ireland with regard to concerns about price signalling. No immediate enforcement action was required but we implemented a strategy to monitor the sector more closely and establish whether there were grounds for suspecting a breach of competition law. The industry has in recent times openly signalled upcoming increases in premiums. We have noted public statements made by insurance companies forecasting, with confidence, that premiums will rise, at times specifying the amount of the predicted rise and that these increases were inevitable. Statements signalling future pricing intentions may result in a degree of unspoken co-ordination which may breach competition law. We have been very concerned by these statements and this week, after detailed planning over a number of months, we issued, under our powers, summonses and formal requests for information to players in the sector. The evidence collected will allow us to establish the facts and take appropriate action.

On the question of what would make things better, our views on the market are informed by our activities. It is clear to us that there are significant issues of transparency, disclosure and confidence in the sector. Parties that have come before the committee have offered different, often conflicting views on what is happening. This does nothing to promote confidence in the market, and the frustration of motorists facing sustained increases is understandable and well founded. We are extremely active in the sector, but our actions alone will not explain what is happening in the market. We are glad, therefore, to see that the Department of Finance working group, on which our parent Department is represented, is studying this issue as a matter of priority. We are available to assist either this committee or the working group as necessary.

As for what we would like to see, it is clear that publication of more detailed, up-to-date and extensive statistical data, particularly relating to claims and settlements, would allow for a better diagnosis of what is happening in the sector. This could be done perhaps by either the regulator or the Personal Injuries Assessment Board and it should restore some confidence. It may also, in turn, promote the entrance of new firms to offer competition, something which is vital to the long-term health of the sector. We must also ensure this competition is healthy, and both the regulator and ourselves have different but complementary roles in this regard. We would welcome any initiative that would allow for consumers to switch provider more easily, thus encouraging competition and greater choice.

We urge the committee and the working group to scrutinise the cost of legal services, an area in which we have advocated for years, and their impact on the cost of insurance. We will be represented on the board of the Legal Services Regulatory Authority which is being set up at present. We are of the view that the work of this committee and the working group is shining an important light on the issues in the sector which we hope will result in recommendations, legislative changes or co-ordinated action that will have a positive and lasting effect on this vital market.