The Office of Fair Trading has issued a warning about the use of competitor data analysis tools after a probe into Experian’s “Whatif?” product sparked concern that many of the UK’s top insurance brands could be involved in illegal price fixing.
The investigation – which is ongoing – exposed the fact that the tool allowed insurers to access not only the pricing information they provided to brokers but also pricing information supplied by rivals.
As a result, the OFT has forced Ageas Insurance, Aviva, AXA Insurance, Liverpool Victoria Friendly Society, RBS Insurance Group, Royal Sun Alliance and Zurich Insurance, along with Experian and SSP to agree to limit the information they share.
According to the Experian product information, “Whatif? is a pricing and competitor analysis tool comprising of premium rates from UK insurers. It assists product development, enabling insurers, marketing and underwriting departments to monitor their competitive position and adjust rates according to desired market position and competitive pressures.”
But the competition watchdog said that the monthly updates about prices charged for insuring certain people in certain vehicles with certain insurers could theoretically have been achieved by receiving individual quotes, but that because of the amount of data involved this would have been “almost impossible”.
In a statement, the OFT said: “The nine companies under investigation are proposing to address the OFT’s concerns by giving formal commitments that will result in the insurers no longer being able to access each other’s individual pricing information through Whatif? Private Motor. Instead, they propose to exchange pricing information through the analysis tool only if that information meets certain principles agreed with the OFT. These would require the pricing information to be anonymised, aggregated across at least five insurers and already ‘live’ in broker-sold policies.”
The OFT also believes the use of the product could even now be causing more widespread problems.
“The OFT limited the scope of its investigation to a small number of parties with a view to achieving a swift and effective outcome,” its statement said. “However, the investigation potentially has wider implications as the Experian tool is just one of a number of similar products used throughout the insurance industry.
“We are aware that similar market analysis tools exist both in motor and other insurance markets and we urge companies using them to ensure that they are complying with competition law,” OFT said.
