The European Commission has published a report focusing on the functioning of the Insurance Block Exemption Regulation, which exempts certain types of cooperation in the insurance sector from EU antitrust rules under certain conditions.
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The Insurance Block Exemption Regulation (IBER) came into force on 1 April 2010 and will expire on 31 March 2017. Before that day the Commission will need to decide on whether to renew the Regulation in its current form, modify it or let it lapse.
The review of the Regulation started with a public consultation in 2014, followed by targeted questionnaires sent to pools, customers, intermediaries’ federations and brokers, as well as mutual insurance associations.Moreover, meetings and telephone calls were held with several stakeholders. The report and staff working document published today present the preliminary findings of this review.
Preliminary findings
The IBER provides exemptions for agreements between insurers relating to (a) joint compilations, tables and studies and (b) co-insurance or co-reinsurance pools. Information gathered so far in the review process shows that the insurance sector needs to cooperate in the exchange of risk information and the co-(re)insurance of certain risks. This cooperation is possible under EU competition rules under certain conditions. At this stage, the Commission’s preliminary view is that it is no longer necessary to maintain sector-specific block exemptions in this field.
With regard to joint compilations, tables and studies, the functioning of the insurance industry no longer appears to require an exceptional instrument like a Block Exemption Regulation. This is because the Guidelines on horizontal cooperation adopted in December 2010 offer guidance on how to assess the admissibility of this type of cooperation. If required, the Commission could also provide complementary specific guidance. This would be more flexible than a Block Exemption Regulation and could more easily be adapted to changing circumstances.
With respect to co-(re)insurance pools, the IBER currently seems to be of limited use and relevance. Pools are set up by several insurers to cover certain risks such as large scale environmental or terrorism risks. Both a study undertaken for the Commission and the information gathered in the IBER review so far show that only a limited number of companies benefit from the exemption. The study identified fewer than 50 institutionalised pools that are potentially covered by the IBER exemption. Furthermore, at this stage the review indicates that little use is made of the current exemption, since a significant proportion of the potential beneficiaries declared in their responses that they consider themselves to be outside the scope of the IBER. The review also showed that insurers share risks in various forms and that there is an important and growing market trend away from institutionalised pools (as identified in IBER) towards alternative and more flexible ways of co(re)insuring risks.
Next steps
On 26 April 2016, the Commission will organise a meeting with stakeholders, to provide an opportunity to discuss the report’s findings. Registration for the event will be open shortly.
In addition, the Commission has commissioned two studies on issues that stakeholders have raised in the consultation process: (i) supply-side substitutability in insurance (asset switching between different insurance products of relevance for pools) and (ii) different forms of co-(re)insurance available on the market and their impact on competition. Feedback from stakeholders on the report and the results of these studies will contribute to the comprehensive overview of the market, on the basis of which the Commission will make its final proposals on the future of the IBER in early 2017.
Report, staff working document and more info on the review processSource: European Commission
