The European Commission has stated in a report, adopted on 24 March 2009, that two of the four forms of cooperation benefiting from the Insurance Block Exemption Regulation (the "BER") may continue to be protected under a partially renewed BER when the current one expires on 31 March 2010. Our previous blog on this issue, dated 7 November 2008, (found here) reported on the lack of responses that had been received by the Commission during the consultation process. At that point, the feeling was that unless a number of compelling arguments in favour of renewing the BER were received, it would be allowed lapse without renewal.
Currently, the BER exempts certain categories of agreements from the anti-competitive provisions in Article 81 of the EC Treaty. The four categories are:
- agreements which relate to the joint calculation of the average cost of risk cover for a specified risk, the joint establishment and distribution of mortality tables and tables showing the frequency of illness, accident and invalidity, and the joint carrying-out of studies on the probable impact of external factors on the frequency or scale of future claims for a given risk and the profitability of investment;
- the setting up and operation of insurance pools for the common coverage of new risks for three years from the date of creation and other risks subject to certain conditions;
- the joint establishment and distribution of non-binding standard policy conditions for direct insurance, and non-binding models on profits; and
- agreements with respect to the establishment, recognition and distribution of technical specifications, rules or codes of practice concerning security devices.
Please see our blog dated 18 April 2008 for further information on the block exemption by clicking here.
In its recent report, the Commission has said that cooperation in the area of joint calculations, tables and studies improve efficiency and increase competition. It said that the current BER allowed such cooperation to take place effectively and should therefore be renewed. The Commission is yet to decide as to the form the renewed BER will take.
The Commission also made clear in its support that the setting up and operation of insurance pools for new risks should continue to be protected under the BER. However, it is likely that the part of the BER exempting insurance pools will be significantly amended to ensure consistency with other insurance-specific legislation.
On the other hand, the Commission has indicated that cooperation on standard policy conditions and agreements in relation to security devices do not warrant inclusion in the renewed sector specific BER. The Commission's reasoning is that there would be no significant difference in carrying out a legal assessment under the BER than there would be carrying out an assessment under Article 81 and these two categories cannot therefore be said to warrant inclusion in a block exemption specific to the insurance industry.
The Commission will hold a public meeting on 2 June 2009 so that it can hear oral representations on the Commission's report and accompanying working document. The Commission will then make a definite decision as to whether the BER should be renewed in full or in part or be allowed to lapse entirely.