After beginning their investigation in January 2010, the Office of Fair Trading ("OFT") are now preparing to accept binding commitments from seven insurance companies and two IT firms in relation to the exchange of data through the use of an insurance analysis tool.
The investigation concerned the use by several motor insurance companies of a specialist market analysis tool, named "Whatif? Private Motor" - a service provided by Experian. The OFT identified an increased risk of price co-ordination among those insurers using the tool, contrary to UK competition law.
Indeed, every month the Experian service provided its subscribing insurers with information enabling them to access the detailed pricing of their competitor's motor insurance quotes. In the absence of this tool, the OFT noted that such information would be "almost impossible" for competing insurers to obtain, requiring hundreds of thousands of individual quotes to be attained.
A further aspect of the OFT's concern was that the analysis tool enabled access for insurers to the "future" pricing information of their rivals, with the information provided before the insurance quotes went "live".
The seven insurance companies and two IT companies involved in the investigation have agreed to offer formal commitments to the OFT addressing their competition concerns. The commitments, as currently formulated, prevent the insurers from accessing each other's individual pricing data through the tool. Any future exchanges will require to meet certain principles agreed by the OFT - requiring the data, for example, to be anonymous, aggregated (i.e. not individual pricing) and current.
If accepted, these commitments would end the OFT's investigation into the matter. However, as the OFT have noted, "Whatif? Private Motor" is just one of a number of similar tools used throughout the insurance industry. Accordingly, this investigation may be a sign of things to come. As such, it is important that those involved with such analysis tools ensure that they are in compliance with competition law.
The commitments are currently being consulted on before acceptance by the OFT. Responses are welcome until 14 February 2011. The commitments and the accompanying consultation document can be accessed by clicking here.