Clifford Chance comments on DG COMP's study on co(re)insurance pools and ad-hoc co(re)insurance agreements on the subscription market, the main objective of which was to provide an in-depth view of both forms of co(re)insurance across each of the 27 EU Member States.
The Study is descriptive only, and makes no recommendation for action, but is expected to provide input for the Commission's next review of the Insurance Block Exemption Regulation (BER) ahead of its expiry in March 2017. The study also considers the similarities and differences between the two types of co(re)insurance arrangements, so as to assist the Commission in determining whether they merit different treatment under competition law. This includes a review of market practices in relation to ad-hoc co(re)insurance agreements following concerns about the potential alignment of terms initially raised in the Commission's 2007 report on the Business Insurance Sector Inquiry (BISI).
At present, certain co(re)insurance pools fall within the terms of the BER and therefore benefit from a safe harbour from the application of the general prohibition on anti-competitive agreements set out in Article 101 of the Treaty on the Functioning of the European Union (TFEU).
However, not all pools are covered. The BER applies only to pools which do not include so called "black listed" restrictions and is only available
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for the first three years of their existence if they cover "new risks" (regardless of the market share of the pool); or
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indefinitely if they cover risks which are not new, provided the market share of the pool falls below certain revised market share thresholds.
When renewing the BER in 2010, the Commission expresses concern that many insurers mistakenly concluded that their pools fill within the BER, for example as a result of a misinterpretation of its terms or due to defining incorrectly the scope of the relevant market when calculating market shares.
With this in mind, the latest Study was intended to assess the degree of compliance. As Commissioner Joaquín Almunia stated, the Commission and national competition authorities "will see to it that the industry does not use the exemption as a blanket protection a will enforce competition rules where and whenever necessary".
The Study gathered evidence from 44 pools by way of interviews supported by questionnaires tailored to the type of market participant. As summarised below, its main conclusions broadly supported the Commission's unease:
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The Study concluded that the definition of "pool" is not widely understood.
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Insurance pools found it difficult to determine the market in which they operate.
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The response rate for questions in the survey relating to awareness of BER and self-assessment of pools was low.
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