MADRID, Spain—Spain's National Commission for Competition has charged six European insurers and reinsurers with fixing prices on construction defect coverage and fined them a total of €120.7 million ($179.2 million).
The commission said the companies met and set minimum prices from 2002 to 2007 on decennial insurance, which is coverage that pays losses from flaws or defects in new residential construction.
The companies and the fines levied against them are:
“The result was complete uniformity in the premiums proposed by the different underwriters present in the Spanish decennial insurance market and the elimination of competition,” the statement said.
The group's aim was to have the entire Spanish market for decennial insurance write at the prices that the alleged cartel devised, the commission claimed. “Toward this end, the reinsurers undertook to work the minimum price agreement into the pricing guidelines they annex to the reinsurance contracts. These guidelines are compulsory for the insurers,” said the commission in Madrid.
There is evidence that members of the alleged cartel pressured and boycotted companies that indicated a willingness to stray from the prices set by the group, the commission said, in some cases by breaking off agreements already reached with the companies.
Caja de Seguros Reunidos denied participating in any arrangement to fix prices or other anti-competitive behavior. The company said the commission’s decision is subject to review by Spanish courts, which it expects will revoke the fines. But the reputational damage caused by the commission’s actions will be hard to rectify, the insurer said.
Swiss Re issued a statement calling the commission's allegations unjustified. The reinsurer said it plans to decide whether to appeal the case after analyzing the decision.
A representative of Munich Re said the reinsurer is reviewing the decision and considering whether to appeal.
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