Irish Government establishes a new “Office to Promote Competition in the Insurance Market”

The Irish Government has announced that it has established a new Government Office to promote competition in the insurance market in Ireland.  It is entitled the "Office to Promote Competition in the Insurance Market".

There have been various initiatives over the years to deal with competition in the insurance sector in Ireland. These have included initiatives and measures by the Department of Finance, the European Commission and the Competition Authority/Competition and Consumer Protection Commission (the CCPC). This is another new initiative – this time by the Department of Finance (i.e., the State treasury). 

The Office is housed in the Department of Finance. Its purpose is to encourage greater competition in the Irish insurance sector.

It held its first meeting on 15 December 2020 to establish its terms of reference and a preliminary work plan for 2021. The purpose of the Office is to "develop the Government's ambitious insurance competition reform programme. This will provide a more coordinated Government policy approach to market competition aimed at bringing down the cost of insurance premiums, including for motor and home policies."  The Minister of State at the Department of Finance who is chairing it "will report on its work to the Cabinet Committee Sub-Group on Insurance Reform". 

The Department of Finance said in a statement on 17 December 2020:

"Competition in parts of the Irish insurance market has decreased in recent years due to several withdrawals of insurers and curtailment of risk appetite from some sectors. In this regard, the 2020 Programme for Government document includes a commitment to create an Office tasked with encouraging greater competition in the Irish insurance market. Today’s announcement fulfils this." 

The Minister of State said that the Office "will provide a more joined up approach across Government and help reduce some of the barriers to greater competition in the sector. I look forward to working with other Departments, Agencies and the private sector to accomplish the Government’s ambitious insurance reform action plan.”

The Office is part of the Department of Finance will be also supported by the Department of Enterprise, Trade and Employment, and will benefit from regular input from other departments, agencies and stakeholders as required.

The Department of Finance's statement says that the input come from various parties which "include" the Central Bank of Ireland (the CBI), the Competition and Consumer Protection Commission (the CCPC); IDA Ireland (i.e., the State's industrial development agency – possibly as a way of encouraging foreign direct investment in the Irish insurance sector; the Motor Insurers’ Bureau of Ireland (the MIBI); the Personal Injuries Assessment Board (the PIAB); the State Claims Agency (the SCA); and insurers, such as Irish Public Bodies (IPB) Insurance.  The Office indicates on its website that the CCPC is among various organisation which will be invited "to meet" with the Office which implies that there will be engagement by the CCPC but the CCPC will not be part of the Office.

The Office was established in line with a commitment in the "Programme for Government" and the recently published "Action Plan on Insurance Reform".

The Minister of State is also said to be writing to the CEOs of insurance companies to canvass their views regarding competition.

The Office has recognised that (in?) any "attempt to intervene in the workings of the insurance market, it is important to bear in mind that the Government must have regard to the following: the EU Directives pertaining to insurance; EU state aid rules; EU and national competition law; and the statutory independence of State bodies." 

Competition in the Irish insurance sector has been a long-running theme. It will be interesting to see how this latest initiative fares.  Some observers will note that the CCPC and the CBI are less centrally involved than one might have otherwise envisaged. All observers will note that there are limitations to the freedom of movement by the new Office including legal constraints.  Its progress will be monitored closely.

For more information on this topic please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 21 December 2020