|Author (Person)||Chapman, Peter|
|Series Title||European Voice|
|Series Details||Vol.10, No.44, 16.12.04|
By Peter Chapman
NEELIE Kroes, the commissioner for competition, is planning to launch an inquiry into the insurance industry amid concern about pricing policies.
The Commission's investigation is likely to focus in particular on insurance brokers, European Voice has learned, mirroring the campaign launched by the New York attorney-general Eliot Spitzer.
Spitzer has shaken the insurance industry around the world after alleging that insurance brokers - including market leaders Marsh & McLennan - systematically placed business with insurers paying huge contingency fees for high volumes or lucrative contracts - rather than those offering the best value for money for brokers' clients.
Other allegations include rigging bids and fixing prices in employee insurance schemes between brokers and insurance underwriters.
Kroes' competition department (DG Competition) has drawn up plans to launch a sectoral inquiry into the activities of brokers and their clients.
Concerns about the brokers surfaced during talks between aviation insurers and DG Competition.
Kroes' spokesman Jonathan Todd said that he could not confirm the move. But he acknowledged that the commissioner was planning to launch an investigation into fair competition in all retail financial services during 2005.
He added that this would cover practices in the banking and insurance sectors.
Sectoral inquiries allow DG Competition to investigate hunches, allegations and concerns about a market in an informal way. But the information gleaned can also be used as the basis for formal charges if it reveals illegal practices such as price fixing or bid rigging.
Brokers said that they had little to fear from a Commission probe.
David Hough, executive director of the London Market Insurance Brokers Committee, whose members include all of the major brokers active in the EU, said: "We said when this first broke in the US that we did not believe, given the character of the market, there was any possibility of similar practices to those alleged by Mr Spitzer."
Sources indicate that the probe is likely to be accompanied by a separate settlement between DG Competition and aviation insurers. They were in trouble with competition watchdogs after a concerted price rise in the wake of the 11 September attacks on the US in 2001.
But an industry source said the EU executive has indicated that it is likely to accept concessions from firms.
These concern greater transparency in the market, to ensure that concerted price rises cannot take place so easily in the future.
DG Competition is understood to have become concerned about the behaviour of insurance brokerages during its aviation probe.
In the wake of the Spitzer investigation, Marsh & McLennan said that it had stopped accepting incentive commissions or bonuses from insurers for selling high volumes or more profitable products.
The two next largest brokers, Aon and Willis, followed suit and said that they would no longer accept incentive commissions from insurers.
Zürich Financial Services, the Swiss insurer, said that it was looking at whether it would continue to pay contingent commissions to brokers in the US and Europe.
Article reports that Neelie Kroes, European Commissioner for Competition, is planning to launch an inquiry into the insurance industry amid concern about pricing policies. The Commission's investigation is likely to focus in particular on insurance brokers, mirroring the campaign launched by the New York attorney-general Eliot Spitzer.
|Subject Categories||Business and Industry, Internal Markets|
|Countries / Regions||Europe|