The Spanish Property Insurance Cartel

Inherent Defects Insurance (“IDI”) for new housing buildings has been mandatory in Spain since 2000. The institution of this requirement prompted an upsurge in the IDI market in following years. Having been confronted with competition, major insurance carriers active in the property insurance market formed a cartel, which involved IDI reinsurers. This article examines the features of the Spanish IDI cartel, as uncovered by the National Competition Commission (“NCC”) in 2009. The companies involved in the cartel were punished with a fine of over €120 million, the largest fine ever imposed by competition authorities in Spain. This article describes how the cartel was organized and operated, and emphasizes the reinsurers’ key role in assuring and propagating the effectiveness of the minimum price agreement throughout the property insurance market. It also critically analyzes the Spanish NCC’s assessment of the cartel, and how it dealt with the arguments submitted by the reinsurers to defend their behavior.
Reference :

Connecticut Insurance Law Journal, vol. 18, issue 2, Spring 2012, pages 79-101.