On 30 March 2017, the EU Insurance Block Exemption Regulation 267/2010 (IBER) will expire, removing the automatic exemption from EU antitrust rules for (a) joint compilations, tables and studies; and (b) insurance and co-insurance pools. Going forward, parties to such agreements will have to “self-assess” to ensure that their agreements comply with EU competition rules. 

What does self-assessment involve? 

Self-assessment requires the parties to an agreement subject to EU law to ensure their agreements satisfy the four exemption tests set out in Article 101(3) of the Treaty of the Functioning of the European Union (TFEU). All four exemptions must be satisfied to achieve compliance.  

This means the parties must demonstrate that their agreement:

(1)  contributes “to improving the production or distribution of goods or to promoting technical or economic progress” - i.e. whether it produces efficiency gains for the parties such as cost savings, better use of resources and increased productivity. 

(2)  allows “consumers a fair share of the resulting benefit” - i.e. whether consumers also derive benefits, such as additional coverage or lower premiums. 

(3)  does not impose on the parties “restrictions which are not indispensable to the attainment of these objectives” – i.e. the agreement does not contain unjustifiable restrictions on the parties, such as post-agreement non-compete clauses or penalties for early withdrawal.

(4)  does not lead to the elimination of “competition in respect of a substantial part of the products in question” - i.e. the parties’ market power does not lead to competitors being driven out or prevented from entering the market. 

The process of self-assessment is therefore a mix of economic and legal tests. A self-assessment report will make recommendations for any changes required to the examined agreement to ensure compliance with EU rules.

The Commission has issued high level “Guidelines” to assist parties to self-assess. These Guidelines do not confer exemptions but explain the Commission’s enforcement policy and give guidance to parties on how to approach compliance. The Commission is bound to follow its Guidelines unless it gives reasons for departing from them in a specific case. 

Recommended action

After the expiry of IBER, parties will be obliged to ensure future compliance through self-assessment.  Such routine compliance measures will become a feature of good commercial management and practice.

Self-assessment of insurance agreements will pose a challenge to the industry. However, there exists sufficient past case law and other sources of EU guidance to enable parties to agreements to self-assess with confidence that they will be able to comply with the rules.

The European Commission enforces EU competition rules on parties to any agreements impacting the EU market: for UK based insurers, there will therefore be a continued requirement to comply with EU rules following Brexit. It is also thought likely that UK competition law will continue to be harmonised with EU rules, to ensure convergence and the avoidance of double-jeopardy.