ACCC receives public liability pooling proposal for not-for-profit organisations

The Australian Competition and Consumer Commission has now received an application from Allianz Australia, QBE Insurance and NRMA Insurance seeking authorisation of a potentially anti-competitive alliance, Acting ACCC Chairman, Mr Sitesh Bhojani, said today.

The alliance partners propose to collectively offer public liability insurance for not for profit organisations, initially in New South Wales.

"Although the application is being made on a national basis, the public liability product will initially only be made available to eligible not-for-profit organisations that operate predominantly in New South Wales.

"The ACCC understands that certain insurance companies have been considering applying for authorisation of this sort of arrangement since May 2002. Now that the application for authorisation has been lodged the ACCC's statutory assessment process can begin.

"The ACCC will be seeking further information in the coming days from the applicants in relation to the proposal. For instance, the ACCC has not yet received the proposed joint venture agreement detailing the proposal nor the proposed model for setting premiums.

"For authorisation to be granted the applicants are required to demonstrate that there is a public benefit arising from the arrangement sufficient to outweigh any anti-competitive detriment.

In this case the ACCC will need to look carefully at issues such as how the proposed arrangement is likely to affect the availability and affordability of public liability insurance for not-for-profit organisations.

"Before it can grant authorisation, the Trade Practices Act 1974 requires that the ACCC test the applicant's public benefit claims through a transparent public consultation process. This process includes seeking submissions from interested parties, and requires the issue of a draft decision for public comment before the ACCC can issue a final decision".

Allianz, QBE and NRMA have also sought interim authorisation of the proposed arrangements. Interim authorisation would provide an exemption under the Act for the arrangement during the period in which the ACCC considers the merits of the application. The ACCC expects to announce its decision in relation to this request in the coming weeks after an initial round of expedited consultation.

Background

Interested parties wishing to make a submission in relation to the proposed arrangement should address their submission to:

The General Manager
Adjudication Branch
ACCC
PO Box 1199
Dickson ACT 2601

or adjudication@accc.gov.au

Copies of the Insurance Council's application and supporting submission are available from the ACCC website or by contacting the ACCC's public register officer on 02 6243 1330.

*The ACCC has the function, through the authorisation process, of adjudicating on certain anti-competitive practices that would otherwise breach the Trade Practices Act. Authorisation provides immunity from court action, and is granted where the ACCC is satisfied that the practice delivers offsetting public benefits. Applications for authorisation are considered on a case by case basis and involve broad public consultation with interested parties. The onus is on the applicant to demonstrate that there is a public benefit arising from the conduct and that the public benefit outweighs any public detriment.