While the insurance industry in the United States has been the subject of considerable antitrust attention recently, there has been a marked increase in antitrust regulator scrutiny of insurer practices outside the United States as well. And with over one hundred countries now having antitrust laws, and increasingly active antitrust enforcers, the risks insurers face if they are engaged in anticompetitive conduct have never been greater.
In the last two months alone, South Korean, Italian and United Kingdom antitrust enforcers have all either announced investigations into insurer activity or announced the imposition of fines against insurers for anticompetitive conduct. On October 14, for example, the Korean Fair Trade Commission announced that it had fined twelve life insurers a total of over $300 million for colluding to fix interest rates on insurance products. The fines conclude an investigation into anticompetitive conduct that was alleged to have begun in 2001 and continued through 2006. The largest fine imposed, against Samsung Life, was for approximately $150 million. Only days later, the Italian Antitrust Authority announced that it had imposed fines on three health insurers, and an insurance broker, for anticompetitive conduct. The fines, which total $13 million euros, address bid rigging in the pursuit of healthcare contracts, which resulted in an increase in premiums.
In the meantime, in September the U.K.’s Office of Fair Trading announced that it was commencing a wide-ranging investigation into auto insurance premiums. The investigation follows a 40% increase in auto insurance premiums in the U.K. in the last year and a request by the Consumer Council of Northern Ireland that the OFT investigate why auto insurance rates in Northern Ireland are considerably higher than they are in the rest of the U.K. As part of its investigation, the OFT announced that it will examine whether price comparison websites in the U.K. have had an anticompetitive, rather than a procompetitive, impact on auto premiums and on whether insurer use of preferred repairer programs has increased, rather than decreased, costs. The use by insurers of preferred repairer programs has also given rise to antitrust issues in the United States, but rarely have such programs been found to be anticompetitive. See, e.g., Harner v. Allstate Insurance Co., Case No. 11-CV-2933 (S.D.N.Y.)
The OFT plans to publish its findings by the end of the year, and to take any further action, should it be required, early next year. Stay tuned.