With a decision published on 16 November 2020, the Italian Competition Authority (ICA) opened an investigation (I844) against the Italian Association of insurance companies (Associazione Nazionale fra le Imprese Assicuratrici (ANIA)) to verify if the so-called “anti-fraud project,” launched by ANIA in 2019 and notified to the ICA in March 2020, goes against the ban on anti-competitive agreements.
The project under the ICA’s scrutiny, inter alia, encompasses:
- the setting-up of a platform, applicable to all insurance lines of business, for the continuous exchange of information regarding instances of fraud , accessible in real time by insurance companies; and
- the creation of a database for life insurance lines (pure risk) and for non-life insurance lines, except for motor insurances (RC Auto), to be used by the insurance companies in the performance of their activities (underwriting and settlements), and containing information provided by the insurance companies themselves, such as information related to the characteristics of claims, the persons involved in various capacities, as well as other factors considered by ANIA as signals of a fraud risk.
Despite recognizing that insurance frauds could cause significant costs for the insurance sector and for the insured persons, the ICA has stressed the existence of potential competitive concerns arising out of the project. In particular the ICA has made reference to:
- the risk related to the absence of adequate neutrality mechanisms capable of ensuring a benefit for the entire insurance system, since the project is developed and managed by an association representing exclusively the interests of insurance companies;
- the risk related to a potential exchange of commercially sensitive information between competing insurance companies, liable to determine an artificial increase of transparency on the relevant markets that may facilitate collusion on strategic variables and produce anti-competitive effects; and
- the additional risk related to the development of shared algorithms for the establishment of homogeneous indicators of a fraud risk that, if used by the insurance companies in the performance of both the underwriting and the settlement activities, could interfere with the strategic decisions of the companies, thus facilitating the alignment of their market behavior.
For these reasons, in the ICA’s view, the project at issue, constituting a decision by an association of undertakings, may amount to an anticompetitive agreement contrary to art. 101 TFEU.
The investigation for ascertaining possible antitrust infringements will be closed on 31 December 2021. The ICA can, at any time – if all the applicable conditions are met - extend the scope of the investigation to other undertakings which may be regarded as involved in the investigated practices or send requests for information also to individual undertakings operating in the insurance sector. Moreover, every interested public or private undertaking or consumer association is entitled to intervene in the investigation on a voluntary basis, upon a motivated request to be submitted by 16 December 2020 (30 days from the publication of the decision).
The opening of this investigation confirms the importance for companies to carry out an adequate risk assessment and antitrust compliance activities for any initiative that may imply a form of cooperation or a direct or indirect information exchange between competitors, even when the initiative is developed in the context of a trade association and is aimed at producing system efficiencies. The investigation further confirms the increasing attention on specific antitrust risks of the insurance sector related to the use of big data and algorithms; use that, despite instrumental to the business activity, may result in an antitrust infringement if realized in a non-compliant manner.