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Competition Authority Guidance on Insurers' use of Preferred Repairers

In December 2012, the Competition Authority (the ‘Authority’) issued a guidance note on preferred repairer arrangements in the insurance sector. The guidance note is the result of the Authority’s assessment of the compatibility of these arrangements, particularly those involving motor vehicle and home insurance policies, with competition law.

In analysing the competition impact of such arrangements, the Authority considered three key issues:

  • The cost efficiencies achieved by insurance companies and the likelihood of lower costs being passed on to policyholders through lower premiums
  • The negative impact on repairers outside the arrangement, particularly the frequency of tenders for repairer contracts and the potential for a foreclosure effect
  • The impact on policyholders including; the use of financial incentives/disincentives regarding the use of preferred repairers and; the protection offered by the Consumer Protection Code 2012 in relation to the quality of work done

The Authority concluded that, as the efficiencies realised by the arrangements were generally of benefit to insurers, policyholders and preferred repairers, these agreements did not infringe Irish or EU competition law.

The impact on third-party repairs was disregarded as ‘the purpose of competition law and policy is to protect competition, not firms who have difficulty competing’.