Rise in Premiums from NU - Breach of Competition Rules?

Crabman

Quote from IAM's "Advanced Driving" Magazine (Winter 2006):

Insurance Premiums to Rise

Drivers are likely to get a shock when they renew their car insurance after a big hike in premiums from Norwich Union.

The company has raised the cost of the average motor premium by 16% - but for higher risk groups, such as young male drivers, the increase is as much as 40%.

Norwich Union says the increase is aimed at ending a recent price war in the insurance market, and it has urged competitors to follow suit.

I may be wrong, but I have a very strong feeling that "urging competitors" to do anything is strongly in breach of competition rules. This is a quote from Chapter I / Article 81 of relevant competition law:

To be caught by the prohibition on anti-competitive agreements, there must be an agreement:

between businesses, decisions by associations of businesses (e.g. trade associations) or concerted practices (i.e. co-operation between businesses that falls short of being an agreement or decision)

I'm aware that they haven't made an agreement as such, but they have "urged" others to do the same, i.e. increase premiums.

As an example, if Tesco were to urge the other big supermarkets, "to increase price of bread to £1.80 per loaf" there would rightly be outrage and perhaps an inquiry from the Competition Commission.

I'm sure someone more in the know with such matters will come along and let us know about this.

Co-incidentally I had my renewal premium from NU today, which has jumped up by £150, so I've ditched them :T

Crabster

dunstonh

Car insurance is loss making and has been for a while. It is currently unsustainable for the long term and NUs call is common sense and just repeats what a number of non affiliated individuals have been calling for.

Astaroth

They are not the first to call for it either... the AA called for it months ago.

As said, there is no actual collaboration and as the industry as a whole is making a loss it is a sensible thing to say. The industry press has however said that it is only if RBS Insurance (aka Direct Line, Tesco, Churchill etc) decides to push up its prices will the whole market move but then they are by far the largest private motor insurance group so it is just another common sense statement

aj3001

Problem is, the higher insurance gets, the more people that drive without insurance, the more that drive without insurance, the more crashes with non insured drivers occur, which costs insurance companies more, so they need more money so premiums go up higher!

Astaroth

Excluding that the average claim is going up 6% per year (increasing amounts of personal injury claims & especially those that exceed the small track limit/ done under no win no fee agreements) where as premiums for the last few years have gone up under 2.5%

I do like the SA idea of paying your TP cover as part of the tax on fuel... hard to drive a car without fuel and so no risk of uninsured drivers. On the flip side of cause it does mean that if you have a high consumption vehicle you will always be paying more TP insurance irrespective of how good or bad a driver you personally are.