MIAB REPORT: The Competition Authority will examine the report into the motor insurance industry with a view to taking legal action against any anti-competitive practices discovered. The most likely area for such action would be a case alleging illegal agreements between separate groups aimed at preventing competition, according to a source.
The authority, which is reviewing the report at the request of the Cabinet, will also consider establishing its own study into the sector. Under new regulations expected to come into effect in June, the authority can conduct studies into particular sectors and, if it sees fit, issue statutory recommendations to the Government or a Minister. Such recommendations will not be binding but will have considerable weight because of their basis in law.
In terms of enforcing the competition laws through legal action, the authority will also examine whether any company or companies are guilty of abusing a dominant position
One of the main findings of the Motor Insurance Advisory Board's (MIAB) report was that the private motor insurance market was not competitive, with just five companies operating in the market, compared with 17 in 1993. It also found vested interests and inefficiencies may account for as much as half the premium paid by law-abiding motorists.
Yesterday, the chairman of the Bar Council, Mr Rory Brady SC, said an "extensive examination" of the insurance industry by the Competition Authority was required, "focusing particularly on the issue of premiums, especially for young motorists".
Mr Brady said the council welcomed the report, which was the first to challenge the position of the insurance industry in relation to awards, costs "and, most importantly, premiums. It recognises that the Irish insurance industry is making excessive profits from motor insurance."
A reduction in premiums required not only changes to the law, which had been already recommended by the council, but also "by the insurance industry being restricted in the level of premiums and the profits it can make". He said the council agreed that an insurance regulator who could control price increases was needed.
Asked about barristers' fees, Mr Brady said they were agreed between barristers and solicitors. They are subject to the right of any client to have an independent assessment as to the reasonableness of the fees by the Taxing Master. The Taxing Master is a legal professional appointed by the Government, not by the legal profession.
He said the Bar Council did not agree with the view that the current system was not working fairly. However, if a review did identify a way of improving the system from the point of view of the consumer, the council would not object.
The Competition Authority, as part of a study into eight professions, is investigating barristers and solicitors. A report, being prepared by consultants, is expected to be completed this summer. A period of consultation will then ensue, after which the authority will issue recommendations.
The Society of the Irish Motor Industry yesterday welcomed the MIAB report. Mr Cyril McHugh, chief executive, said the report had highlighted the "unacceptable legal costs and inefficiencies in the motor industry". He called for the implementation of the recommendations made in the report.
Meanwhile, the Irish Insurance Federation (IIF) rejected suggestions that high motor insurance premiums were leading to excessive profits for motor insurers. IIF chief executive Mr Mike Kemp said the MIAB report had misled people into thinking that motor insurers in Ireland were making excessive profits.
"Old statistics do not tell us anything about the current state of the market," he said. "The fact is that, today and for the past three years, motor insurers in Ireland have made losses running to hundreds of millions of euros."
