Antitrust: Motor insurance
The Labour Government has promised to make the UK competition regime "fit for the modern economy, promoting innovation while protecting consumers". While Labour’s manifesto is titled “Change” the Government's overarching promise to business has been economic stability, which will drive investment. It is therefore difficult to see why it would put pressure on the CMA to become more aggressive and create uncertainty for businesses.
However, Labour may attempt to put pressure on the CMA regarding markets that have been historically scrutinized, including the insurance sector. In particular, Secretary of State for Transport, Louise Haigh, prior to the elections called on the CMA to investigate the private motor insurance market. The increase of Motor insurance prices have been a source of regulatory scrutiny for a number of years and the new government may push this forward. A market investigation in motor insurance or any other CMA intervention will have to be considered carefully by businesses active in the motor insurance market as the implications of any wrong-doing could have significant consequences, including fines, reputational risk and disruption of the day-to-day operations.
Digital Markets – DMCC Act
The new Labour government will oversee important reforms to the UK competition regime early in its term through the Digital Markets, Competition and Consumer Act ("DMCC").
Regulatory bodies worldwide are increasingly concerned about the influence of dominant multinational technology companies (Big Tech) on financial services and insurance companies. In the UK the Labour Government and the relevant watchdogs, the Competition and Markets Authority (CMA) and Financial Conduct Authority (FCA), are responding to these growing competition law risks. The DMCC will take effect in late 2024 and will create a new regime to increase competition in digital markets by conferring bold new powers on the CMA. In particular, the CMA will be able to designate Big Tech companies as having ‘Strategic Market Status’ where they are very powerful in relation to digital activities and will consequently have the power to impose conduct requirements.
The DMCC is expected to have a direct impact on the insurance sector, as Big Tech companies are anticipated to enter the insurance market through numerous routes: as an intermediary, as a provider of third-party or business services, or as a direct insurer. The DMCC will also introduce substantial CMA investigatory powers in relation to merger control and cartel investigations, which will also apply to the insurance sector.
National security and investment
A key area to monitor under the Labour government is national security. Chancellor Reeves has noted that security lies at the centre of Labour's economic mission and therefore we expect the Labour government to revisit and may reform the national security screening rules established under the National Security and Investment Act (NSI Act). Companies looking to invest in or acquire businesses with activities in the UK will need to monitor developments closely.
In particular, the Labour Government has highlighted in its manifesto that innovative technology and Artificial intelligence (AI) are key markets of focus and priority and its intention is to introduce separate regulation targeting the development of Artificial Intelligence.
Insurance businesses contemplating acquisitions of (partnerships with) companies providing new technology and software using AI, will need to consider whether regulatory approval under the NSI Act is required – this would even be required if the national security risk is minimal because of the acquirer's profile.
