Aviva is one of six insurance companies to sign up to a new data sharing agreement
Six insurance companies and two IT software firms have agreed to limit the data they share with each other after a trading watchdog warned their actions could dampen competition in the motor insurance market.
Insurers Ageas - formerly Fortis - Aviva, Axa, Liverpool Victoria, RBS and Zurich have all agreed to the commitments, along with IT software and service providers Experian and SSP.
The Office of Fair Trading (OFT) said in January that it was consulting on a draft agreement text and confirmed that it has accepted the commitments. It has, therefore, ended an investigation and will not proceed to decide whether or not the Competition Act has been infringed.
Businesses that are found to have breached competition law can be fined up to 10% of their annual worldwide turnover and ordered to change their behaviour.
The OFT had found an increased risk of price co-ordination among insurers using a specialist market analysis tool provided by Experian called Whatif? Private Motor. The tool, which was run by Experian, provided brokers with details on insurance premiums, including any price hikes that insurers were introducing which had not yet gone live.
But it was also possible for insurers who contributed to the tool to use it to gain information on their competitors' pricing policies, including their underwriting practices and which areas of the market they were particularly competitive in. It enabled them to monitor premium increases being made by other firms before the information was in the public domain.
The OFT warned the firms that, because insurers were able to access information about their competitors' future pricing intentions, the information exchanged through Whatif? Private Motor raised competition law concerns, in particular that it could potentially be used to co-ordinate on price.
The formal commitments ensure that the companies will exchange pricing information through the analysis tool only if it meets principles agreed with the OFT. If the information is less than six months old, it must be anonymous, aggregated across at least five insurers and already "live" in broker-sold policies.
OFT executive director Clive Maxwell said: "The exchange of future pricing data between competitors has the potential to dampen competition, preventing customers from getting the best value. We have been able to address our concerns by accepting commitments that reflect the specific features of this market.
"These limit data-sharing while ensuring a certain level of information remains available to potential new competitors, in particular smaller firms, to encourage entry into and healthy competition in the market."
