Eithne McCarthy, from the Financial Services Unit of the European Commission's Competition Directorate General (DG Comp), made a presentation on the new Insurance Block Exemption Regulation (BER) to the Law Society's Competition Section on 13 April 2010. This presentation was chaired by Becket McGrath, a competition partner at EAPD and current chair of the Section.
Ms McCarthy, who led the DG Comp team on the BER project, spoke on the scope and implications of the new BER, which came into force on 1 April 2010. She also explained the process for deciding whether to renew the previous BER. Please click here to review our previous blog about the new BER.
Ms McCarthy explained how the Commission had taken a first principles approach when deciding whether and to what extent to renew the existing BER. One important factor was the extent to which an ending of the BER would lead to beneficial co-operation ceasing. This led to the ultimate decision to retain and tighten up the BER for the preparation of joint compilations, tables and studies and for co-insurance and co-reinsurance pools, while dropping the exemptions for the establishment of standard policy terms and common specifications for security devices. The effect of repealing the exemptions is that parties to potentially anticompetitive agreements or arrangements will need to self-assess whether competition rules are breached. The Commission has noted that it would, in particular, like to see better self-assessment by pools.
There was considerable interest from the audience about where the Commission now stood on its findings in the business insurance sector inquiry, which were published in 2007. Particular concerns were voiced over the Commission's findings concerning the risk of the operation of subscription markets infringing Article 101 of the Treaty on the Functioning of the European Union. Ms McCarthy explained that, while the work undertaken in the context of the BER had not revealed any new concerns on this front, the Commission's original concerns over premium alignment on subscription markets had not gone away. She confirmed that the Commission was planning a series of follow-up questionnaires on this topic in the year ahead, to assess how the market has responded to the Commission's findings. She stressed that, while the Commission would prefer to see a market solution to its concerns, it was prepared to take enforcement action if necessary. While Ms McCarthy acknowledged that the BIPAR principles were a step in the right direction on this front, it was left unclear whether they would be viewed as sufficient.