The EC has launched a consultation on the IBER that aims to facilitate co-insurance and allow insurers to share information in order to more accurately price risks. The EC will use the consultation to help decide whether to retain, amend or abandon the regulation when it expires in March 2017.
It appears that the EC is less inclined to tinker with the regulation ahead of its latest renewal, after removing two of the four IBER categories exempt from normal European competition rules back in 2010.
The Commission has, however, raised concerns that some insurers are misusing the rules. As a result leading lawyers have urged industry bodies such as Ferma, Insurance Europe and other stakeholders to reiterate their support for the IBER to try and ensure that this important regulation is renewed.
The IBER exempts insurers from EU competition rules for certain practices. It permits cooperation between insurers on data compilation to help them calculate the cost of covering risks more effectively.
But perhaps more importantly for insurance buyers the regulation allows pooling of subscription capacity via co-insurance or co-reinsurance pools, provided certain conditions are met. This facilitates the coverage of risks that would otherwise not be insurable.
In August the EC launched a consultation on the future of the IBER ahead of a seven-year mandatory review of the regulation in which the authorities will decide whether the sector-specific antitrust regime is justified. The Commission said it is interested to hear about market developments and views on whether the regulation should be renewed, partially renewed or not renewed at all. The consultation sets out detailed questions on the operation of the insurance market and seeks justification for the retention of the IBER.
It asks whether the IBER has enabled insurers to price risks more accurately, enter markets where they would not otherwise have been active and whether there would be changes in insurers’ conduct, for example through co-(re)insurance, if the IBER were to expire.
John Milligan, Partner at Clyde & Co who specialises in EU law and related aspects of international trade, explained why many believe the IBER is good for both buyers and insurers. “It [IBER] creates efficiencies, reduces costs and increases availability and capacity of insurance…It would be wrong to say that won’t take place anymore if the exemption goes but there would be less legal certainty for insurers, greater compliance costs and greater delays before agreements could be put in place. Non-renewal could lead to greater or undue caution about entering into certain arrangements because of the uncertainty. So we would not view non-renewal as positive,” he said.
Submissions by interested parties must be made by 4 November, 2014. Based on this feedback the EC will submit a report to the European Parliament and Council by the end of March 2016.
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European Commission Consultation link
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