CNMC investigates insurers to ensure competition
The National Commission on markets and Competition (CNMC) has set a new objective: the insurance industry. Sources aware of the situation point out that in the supervisory authority they consider that there are some segments of this sector where there is little competition and that they are preparing a study on the subject which may include a number of policy recommendations.
At the end of last year, the insurance sector managed 242,388 million euros of its clients' assets-in the form of pension schemes, life income, unit-linked and other life-saving insurance-and recorded a non-life premium income of 37 billion euros.
Their strong strength has meant that their accounts have been very poorly affected by the economic crisis triggered by the coronavirus. The problem is that, in the view of CNMC, the structure of the sector is not aligned with full competition. And so it is on the agenda to draw up a review of the industry.
For example, in death insurance it is not common for the surplus to be returned, even though this is expressly stated in the regulation. In this type of product, the insurer is committed to the deceased to take care of the funeral expenses. But when there is plenty of money, instead of returning part to the family, the company usually keeps it, when its reimbursement should be automatic. In theory, the insurer must always pay back the money that has not been spent and which is established within the contract. It also happens in car insurance when cancelled early.
Sources aware of the intentions of the supervisor who presides over Cani Fernández point out that the agency considers that the insurance market has some dysfunctionalities, and that it lacks transparency. It is preparing a study to analyse the degree of competition in the sector, after which it will eventually make proposals for regulatory changes.
Unespa position
A spokesperson for Unespa, the insurance company, explains that "the variety of entities operating in each line of business and the wide product offer guarantee market conditions that are respectful of the interests of the customers". It also recalls that the sector maintains a policy that is very respectful of competition law and that Unespa itself has a Handbook for the Protection of Competition.
One of the market niches where there is the most concentration is death insurance. In this sector, the first operator (Santalucía Seguro) and the second (Ocaso Seguro) account for more than 50% of the market. For a few years, other entities, such as Catalana Occidental or Mapfre, have tried to make room. There is also a high degree of concentration in health insurance, with Adeslas, Sanitas and Asisa with a joint quota of more than 60%. In this case, the market is somewhat distorted by the great weight of the collaboration of some of these companies with Muface, the mutuality of state officials.
In death insurance, the two largest companies have more than 50% of the market
Another segment that has collected customer complaints is life insurance. In this area, large banking groups have great pricing power, thanks to their branch networks. VidaCaixa (subsidiary of CaixaBank) is the great sectoral leader, followed by Mapfre (who sold insurance with Bankia), BBVA Seguro, Banco Santander and Zurich (allied with Banco Sabadell).
Several studies have shown that the life insurance prices offered by these banking insurance alliances are more expensive than those of conventional insurers.
