European Commission consults on the insurance block exemption

On 17 April 2008, the European Commission announced a consultation on the future of the insurance block exemption which exempts from EU competition rules certain forms of co-operation between insurers e.g. certain standard policy conditions. The European Commission has announced that the consultation is combined with targeted questionnaires to industry, national regulatory and competition authorities and consumer groups. The aim is to determine how the block exemption is being used and its impact on the various insurance markets in the EU. The deadline for responses is 17 July 2008.

It is not surprising that the European Commission has launched this consultation, given its conclusions in the insurance sector investigation in September 2007, in which it noted that it had yet to be persuaded that the insurance block exemption was still necessary. Should the Commission remain unpersuaded, it will not enact a further insurance sector block exemption when the current regulation expires in March 2010. Conversely, if industry responses convince the Commission that an insurance block exemption should be retained, it will consult on a new draft insurance block exemption.

The consultation paper sets out the insurance block exemption comments received by the European Commission during its sector investigation, comments received from national regulatory authorities and the Commission’s current considerations and case experience. It also sets out a number of questions about the specifics of the insurance block exemption. Areas of particular interest to the European Commission include:

• whether the block exemption is being used, where and why;
• whether the business risks or other issues in this sector make it special and different from other sectors (which operate without a sector specific block exemption); and
• whether the block exemption gives rise to any anti-competitive effects which harm consumers, such as higher prices or reduced supply of certain insurance products.

This is a crucial opportunity for the insurance industry to make its views known. Failure to convince the European Commission looks highly likely to lead to the withdrawal of the insurance block exemption, which is generally regarded by the industry as a valuable tool.

Please contact us should you wish to discuss making your response.

For the text of the European Commission’s consultation paper, please click here.