MEASURES TO PREVENT THIRD PARTY VEHICLE INSURANCE PREMIUM INCREASES
PRESS RELEASE
PRESS RELEASE
Third Party Motor Vehicle Insurance: the Competition Authority opposes measures that will discourage competition
At its meeting on 27 April 2001, the Competition Authority resolved to submit a report to the Prime Minister, the Minister of Industry, the Minister of the Treasury, and the Minister of Finance, regarding the competition problems that might arise as a result of the adoption of certain measures relating to third party motor vehicle insurance.
First of all, the Authority recalled that its investigation - which was concluded on 28 July 2000 with a decision on the penalty imposed, which is currently being examined by the "Council of State" supreme administrative court - had shown that, despite the deregulation of insurance premiums, there was still widespread collusion between the insurance companies on the third party motor vehicle insurance market.
Any measures introduced to reduce the cost to consumers should encourage greater efficiency in the insurance industry, by fostering genuine competition between the insurance companies concerned. The Authority therefore emphasized that it was unable, for this reason, to agree with the adoption of measures to introduce tax reliefs for companies or consumers, or to provide subsidies for the purchase of insurance policies.
Even though the transfer of resources to consumers might appear to be to the benefit of consumers, the fact remains that subsidies cause consumers to lose interest in seeking a more cost-effective policies, thereby helping to entrench the practice of sharing customers between the insurance companies and keeping the premiums high. A fortiori, far from tackling the real causes of increased premium levels, the granting of tax reliefs to companies merely confirms that some insurance companies are inefficient, while failing to bring any medium/long term benefits to consumers.
On a market in which consumers are forced to purchase a particular commodity, any measures designed to compensate them will necessarily lead to further price increases in the long run, without tackling the underlying structural causes of the problem. In the medium term, any such measures could therefore seriously damage the insured.
Rome, 30 April 2001