THE sale of the Bennetts insurance brand to the Ardonagh Group Limited could lead to less choice, higher prices, and lower quality of service, leading to the Competition and Markets Authority (CMA) stepping in.
The Ardonagh Group, which operates the Carole Nash and Swinton brands already, announced in February this year that is had acquired the Bennetts brand for £26m. Should the deal go ahead, Ardonagh will be by far the biggest insurance supplier in the UK, owning three of the largest motorcycle insurers. The sale would make the group three times larger than its next competitor.
The CMA has carried out a phase one investigation into the sale and found out that Bennetts and Ardonagh are close competitors in the UK insurance market. It also found that should the merger go ahead, the merged company would only face limited competition, albeit from much smaller insurers and brokers.
With many consumers turning to price comparison website to buy insurance, Bennetts, and the Ardonagh Group both have a high proportion of returning customers coming direct to their door. Bucking the trend for such demand on this type of website. This nullifies the advantage some smaller companies might hold over the two firms, as smaller brokers and insurers won’t gain any advantage by aiming for lower premium policies.
Colin Raftery, CMA Senior Director, said:
“Over one million motorcyclists in the UK rely on good value and high-quality insurance to keep them on the road and to provide an effective safety net when things go wrong.
“We’re concerned that Ardonagh buying up its most important competitor could lead to a lack of competition in the market, resulting in a worse deal for customers across the UK when they next come to renew their policies.”
Ardonagh and Bennetts now have 5 working days to offer any undertakings to address the CMA’s concerns. If they do not do so, the merger will be referred for an in-depth Phase 2 investigation.
