In 2022, the Compulsory Liability Insurance of Health Care Providers Act (hereinafter the ‘Act’) was adopted, which obliges every health care provider operating under a licence to enter into a liability insurance contract no later than 30 calendar days from the entry into force of the Act. The Act entered into force on 1 November 2024. During the drafting of the Act, three insurance companies expressed their willingness to offer compulsory liability insurance for health care providers (hereinafter ‘patient insurance’). Shortly before the law entered into force, it became clear that two of them would not offer the service after all, leaving the Estonian branch of AB ‘Lietuvos draudimas’ (hereinafter ‘PZU Insurance’) as the only provider of patient insurance.
The Competition Authority received a total of 8 notifications regarding the introduction of compulsory patient insurance:
- 1 application for the commencement of state supervisory proceedings concerning the possible anti-competitive exchange of information by Vandeni Kindlustusmaaklerid AS;
- 2 applications for the commencement of state supervisory proceedings concerning insurance premiums charged by PZU Insurance;
- 5 memoranda with a request to check and comment on the situation in the patient insurance market;
- about a dozen media inquiries and meetings which were covered in several articles.1
In the application for the commencement of state supervisory proceedings concerning the possible anti-competitive exchange of information by Vandeni Kindlustusmaaklerid AS, the Competition Authority was asked to verify what data insurance companies that want to quickly enter the Estonian market through an insurance broker use for assessing their insurance risk. The Competition Authority examined the facts highlighted in the inquiry and decided not to initiate supervisory proceedings.
In the applications for the commencement of state supervisory proceedings concerning the insurance premiums charged by PZU Insurance, the main problem highlighted was that the patient insurance provider allegedly charged excessively high insurance premiums. According to the applications, PZU holds a dominant position in the patient insurance market and, abusing its position, it set excessive premiums that do not correspond to the actual costs incurred by the undertaking. It was also stated that since PZU Insurance is the only service provider in the patient insurance market, all health care providers are forced to conclude contracts with unfairly high prices.
The Competition Authority did not commence supervisory proceedings, considering it premature to affirm PZU’s dominant position in the insurance market. This position has lasted only a short time and has been affected by the preparatory activities preceding the entry into force of the Compulsory Liability Insurance of Health Care Providers Act. According to the insurance companies’ justifications, the higher-than-expected insurance premiums are due to the fact that the number of claims and compensations is increasing manifold compared to voluntary insurance, which also increases the company’s labour costs. Insurance companies have also cited the lack of practice and statistical data as an influencing factor. The lack of data increases the risk of the insurance product, which the company must mitigate through insurance premiums. Based on the above reasons, the Competition Authority found that in those circumstances there was no reason to assert that PZU Insurance had abused its dominant position in the market or violated other competition rules. Therefore, there were no grounds for initiating supervisory proceedings.
The decisions of the Competition Authority are available in the Authority’s document register.2
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1 Amet: ministeeriumi kehv töö pole kindlustuse süü!