- Does your car security system meet the car insurance requirements?
- Car Insurance Claim could be rejected in failure to activate security requirements
Tracking companies provide a very important service to vehicle owners through their tracking technology. They deliver these services under scrutiny of an industry representative body in a market dominated by a few major players.
Yesterday the Competition Tribunal found three vehicle-tracking companies and the industry’s representative body guilty of anti-competitive behaviour.
The tribunal found that Netstar, Matrix Vehicle Tracking, and Tracker Network – representing more than 90% of the industry – and the Vehicle Security Association of SA contravened the Competition Act by setting standards that created barriers to entry to the industry by other companies.
What does ant- competitive behaviour do to the consumer?
- The Competition Tribunal judged that this denied consumers the benefit of competition, such as lower prices, greater choice and technological development.
- The standards were judged to be exclusionary, self-serving and irrational.
What is the effect of anti-competitive behaviour on smaller vehicle tracking companies?
The case before the Competitive Tribunal was brought by a small tracking company – Tracetec. Tracetec wanted to enter the stolen-vehicle recovery market in which it believed its radio-transmitter technology could be successfully applied. The high industry standards however prevented Tracetec from entering the market.
How is the Vehicle Tracking Industry regulated and what is is the purpose of such regulation?
- The industry is regulated by an industry body –The Vehicle Security Association [VESA]
- The SA Insurance Industry Association represents all the large insurers and controls a large part of the industry.
- The SA Insurance Industry Association [VESA] sets standards for its members.
- The big short term insurers will only approve the installation of a VESA approved vehicle security system by a client for the purposes of reduced car insurance premiums.
The Competition Tribunal found it is not possible for a tracking company to enter the market without the approval of the association. It was decided by the Competition Tribunal that the standards set by VESA were not for the benefit of the consumer but rather to protect its own business interests.
Effect of this decision by the Competition Tribunal
The major vehicle tracking companies have expressed disappointment with the findings by the Competition Tribunal and are considering whether to appeal this judgement. They believe that their participation in setting the VESA standards are done in good faith at the request of the insurance industry. It is believed that regulation in the industry and standards are needed to protect both the insurance companies and the public against fly-by-night operators.
It is to be expected that there will be much discussion in the vehicle security industry on how standards should be changed and what could be done to allow more vehicle tracking companies to actively participate in the industry. Insurance companies will closely monitor these developments and the risks to vehicle theft presented by the installation of systems not meeting the highest standards….
Vehicle owners should be alert to the requirements from the industry – and communicate with their insurers. It is ultimately the car insurance company who will decide whether your vehicle security system is effective enough to allow you to benefit from reduced car insurance premiums.
We would like to urge all vehicle owners to request the necessary confirmation from their insurers and not to rely on media reports regarding the quality or effectiveness of products from vehicle tracking companies!