Italy's Auto Insurers to Fight Government Antitrust Action.

Italian insurers and industry observers are bewildered by government claims that insurance companies engaged in anti-competitive behavior--charges that come with fines of some 700 billion lire (about $328 million). Insurers denied the allegations and vowed to fight the penalties.

Antitrust authorities charged that insurers representing 80% of the auto insurance market exchanged sensitive information in a price-fixing scheme that drove up rates for auto-liability policies. They also said their investigation showed companies consistently refusing to sell fire and theft coverage to customers unless they also bought liability coverage.

A response from the Associazione Nazionale fra le Imprese Assicuratrice, the insurance trade association, termed the alleged conspiracy "a cartel that does not exist" and said the exchanges of information cited by the government were normal, accepted practice in the insurance industry around the world, necessary for providing the technical basis to set rates.

Maurizio Lualdi, an analyst with Credit Suisse First Boston in London, termed the charges "almost nonsensical," echoing the industry's assertions about what was normal practice. Further, he said, "They are talking about a cartel that has been losing money over the past 10 years."

Since the auto-liability market was deregulated in 1994, rates, products and available sales channels have continued to vary and proliferate, the association said. It blamed a general rise in rates on steadily increasing claims costs in a market where one in five accidents results in payment of a personal injury claim--compared with one in 10 elsewhere in Europe.