Commission Adopts New Block Exemption Regulation for Insurance Sector

The European Commission has adopted a new Block Exemption Regulation in the insurance sector after a detailed review of the old regulation.

The new Regulation, which comes into force on 1 April 2010, renews the exemption from the prohibition against restrictive practices contained in Article 101 TFUE for the following practices:

  • Agreements in relation to joint compilations, tables and studies
  • Common coverage of certain types of risks (i.e., insurance pools)

On the other hand, the following practices are no longer exempted:

  • Agreements on standard policy conditions
  • Agreements on security devices and safety equipment

The Commission plans to address these two types of agreements in its EU Guidelines on Horizontal Cooperation Agreements, which are currently being reviewed.

As far as the two exempted categories are concerned, it is accepted that the exchanging of certain information is important for the insurance sector to allow insurers to assess risks accurately. This can also facilitate market entry and thus benefit consumers. The new regulation clarifies the scope of the information that can be exchanged, and creates a new right of access to the results of the information exchange for customers and consumer organisations.

Subject to certain conditions, the new Regulation also exempts pools which either cover new risks or fall below certain market share thresholds, namely 20 per cent for insurance and 25 per cent for reinsurance. For this purpose, a new approach to market share calculation is being introduced: Revenue for market share purposes must now also include revenue from outside the pool, not just inside the pool as under the old Regulation. Moreover, the new Regulation broadens the definition of “new risks” to cover risks whose nature has changed so materially that it is not possible to know in advance the subscription capacity necessary in order to cover them.

The full test of the new Block Exemption Regulation is available here.