The Competition Commission (CC) has released an issues statement and timetable for its market investigation into the supply and acquisition of private motor insurance (PMI) in the United Kingdom. The CC investigation will seek to establish whether any features of the PMI market have the effect of preventing, restricting or distorting competition within that market. The CC has extensive powers to impose remedies, where necessary to address its concerns.
The Office of Fair Trading (OFT) referred the PMI market to the CC in September 2012, following a public consultation process and market study (the Study). The Study gave the OFT reasonable grounds to believe that certain features of the PMI market had a negative effect on competition, thereby justifying a reference to the CC for an in-depth investigation.
The CC's issues statement identifies eleven issues on which it will focus its investigation. These reflect the complexity of the PMI sector and include the following areas:
- concerns arising from the separation of cost liability and cost control;
- issues arising from information asymmetries and lack of alignment of interests between consumers and post-accident service providers;
- the high level of concentration in certain market segments, such as drivers in Northern Ireland, young drivers and elderly drivers, and possible barriers to entering those sectors;
- whether the four largest price comparison websites have market power;
- product complexity and pricing; and
- relationships between insurers, on the one hand, and insurers, price comparison websites or parts suppliers, on the other.
The issues statement does not indicate that any competition concerns have yet been identified. Those wishing to submit evidence on the issue must do so in writing by 9 January 2013. The relevant contact details for submitting evidence can be found here. The CC is due to publish its final report by 27 September 2014.