Commission report on the functioning of the Insurance Block Exemption Regulation may signal significant legal changesKontakt
The current Insurance Block Exemption Regulation (IBER) entered into force on 1 April 2010 and expires on 31 March 2017. A similar block exemption applies under the Norwegian Competition Act. IBER provides a block exemption for agreements relating to:
- Joint compilations, tables and studies, so enabling the exchange of statistical information (calculations, tables and studies) subject to the specified conditions.
- Common coverage of certain types of risks (co(re)-insurance pools), subject to market share thresholds and other specified conditions.
The Commission is carrying out a full impact assessment of possible policy options before the current IBER lapses in March 2017: non-renewal, partial renewal (one exemption only and/or renewal with amendments) and renewal. The report published in March 2016 gives an overview of the Commission’s preliminary findings and provisional conclusions on the functioning of the IBER.
The Commission has provisionally concluded that, although there are indications of an enhanced need for cooperation in the insurance sector in relation to the compilation and distribution of joint calculations, tables and studies, and the co-(re)insurance of specific types of risk, the strict conditions for the creation of a sector-specific block exemption regulation with respect to these categories of agreement seem no longer to be met.
With respect to the compilation and distribution of joint calculations, tables and studies, the added value of a specific block exemption is questionable. The functioning of the insurance industry no longer appears to require an IBER. The Horizontal Guidelines already offer guidance on self-assessing the admissibility of this type of cooperation. Also, the Commission can, if necessary, provide specific guidance, which is a far more flexible instrument that can be more easily adapted to changing circumstances.
With respect to co-(re)insurance pools, the Commission’s preliminary view is that, due to its limited use and relevance and the concrete risks of misapplication, renewal of the IBER is not justified.
The Commission emphasises that the lapsing of the exemption for pools would not mean that they would be prohibited, but that they would be assessed under the same competition rules as other sectors. A case-by-case, self-assessment on the basis of its Horizontal Guidelines will ensure that pools produce net positive effects for consumers and competition within the meaning of Article 101(3) of the TFEU (section 10(3) of the Norwegian Competition Act).
In the absence of an industry specific block exemption such as the IBER, insurance companies and Insurance intermediaries such as brokers and agents, would have to revert to the self-assessment system which is applicable in other industries. This may lead to higher risks as insurers must be more cautious when cooperating and exchanging information with competitors. A non-renewal of the IBER may also lead to greater uncertainties throughout the industry, as the precise extent of information which may be exchanged in the absence of a block exemption is unclear.
The Commission is to hold a meeting with stakeholders on 26 April 2016, to provide an opportunity to discuss the report’s findings. In addition, it has commissioned two studies on issues that stakeholders have raised in the consultation process:
- Supply-side substitutability in insurance (asset switching between different insurance products of relevance for pools).
- Different forms of co-(re)insurance available on the market and their impact on competition.
Feedback from stakeholders on the report and the results of these studies will contribute to the comprehensive overview of the market, on the basis of which the Commission will make its final proposals on the future of the IBER in early 2017. If the IBER is allowed to lapse, the block exemption under the Norwegian Competition Act will lapse as well and insurance companies must perform self-assessments pursuant to Section 10 in order to ensure regulatory compliance.
SANDS has a competition and anti-trust team which advises domestic and foreign clients on compliance with the EU/EEA and Norwegian competition rules. Coupled with an insurance team with a well-rounded view of the insurance sector, SANDS is well equipped to assist insurance companies in self assessments under the competition rules and provide commercially relevant advice in response to any possible legal changes.