The Office of Fair Trading has recently announced it has opened its consultation on car insurance companies and the commitments offered by them that have been formulated to promote cheaper car insurance premiums regarding competition and pricing data exchanges between insurers.
An investigation conducted by the OFT highlighted concerns that seven motor car insurance providers have had access to not only their own car insurance rates but the pricing information of their competitors through the use of a price analysis tool used by brokers. The OFT issued a warning to the seven car insurance companies of the risks of price coordination due to the nature of the exchanged information, adding in January of this year that it began a consultation on draft commitments after it was minded to accept these commitments as a way to address its concerns.
The results of the OFT’s consultation are that it is now considering the acceptance of a draft commitments amendment which will not permit the exchange of data through the tool if it is older than 6 months. The tool currently allows up to 36 months’ worth of data to be shared amongst its users.
The OFT is of the belief that altering the duration of available information will work to encourage new competitors to enter the market and create healthy levels of competition. However, the organisation still insists that every other requirement of the commitments offered by the insurers are a necessity in order to remove its concerns regarding competition – which include requiring the anonymisation and aggregation of pricing informationacross a minimum of five insurers and not supplying information to insurance providers until the prices are actively appearing in purchased policies.