The Office of Fair Trading has recently ordered several leading car insurance companies to limit their information sharing practices.
The industry regulator issued the order amidst fears that car insurance rates could be driven upwards. The limitations put in place by the OFT should reduce the danger of the car insurance groups singled out by the ruling being found in breach of competition regulations.
The OFT warned RBS Insurance, Zurich, Aviva, Liverpool Vitoria, Axa, Zurich, Ageas, and RSA that the shared data could lead to an unfair inability for customers to find discount car insurance.
One of the insurers listed actually initiated the new regulations. RSA decided to contact the OFT in May of 2009 with a warning that certain classes of private motor data supplied to them by credit checking firm Experian could be used to encourage practices that could be damaging to competition. The software grants access to pricing information supplied by competitors to insurers and their brokers. Included in the data provided are future rate hikes.
All involved insurers have subsequently agreed to desist in using the pricing tool in that manner. Going forward, all shared information will be presented in an anonymous manner instead. The figures will also represent the average of a minimum of five insurers. Price changes will not be readily publicisied until after such time that they go live.
The OFT stated that it has ceased investigating the matter. Moreover they have declined to rule on whether each of the companies singled out by the watchdog group had been in breach of any competition regulations.
OFT executive director Clive Maxwell stated that active levels of competition between car insurance companies leads to increased economic growth and better consumer value. Anything that has the potential for dampening this is something to be concerned about, added Mr Maxwell.