On 17 March, the European Commission published the preliminary findings of its review of the Insurance Block Exemption Regulation (“IBER”). The IBER provides a safe harbour from the EU law prohibition of anticompetitive agreements for specific types of insurance industry practice that fall within its scope.
While the Commission is some way off reaching a final conclusion, its preliminary view is that the IBER should not be replaced when it lapses on 31 March 2017. Such an outcome would mean that the legality of some common agreements in the insurance sector would fall to be considered under general competition law principles, rather than sector specific rules.
In its current form – which is already narrower in scope than previous iterations – the IBER exempts two categories of insurance agreements, namely:
- agreements between (re)insurers to exchange information between themselves in the form of joint compilations, calculations, tables and studies (“Information Exchange Agreements”); and
- agreements between (re)insurers to jointly cover certain risks by way of co- (re)insurance pools (“Pool Agreements”)
With regard to Information Exchange Agreements, the Commission’s provisional view is that its 2010 Horizontal Guidelines, which set out general principles for the assessment of the legality of agreements between competitors, provide sufficient guidance on self-assessing the admissibility of this type of co-operation with European competition law. As a result, the Commission currently considers that the IBER “is [no longer] justified because of its limited use and relevance”. Should the Horizontal Guidelines prove insufficient in practice, then the Commission suggests that it could supplement them by providing additional, bespoke guidance for such agreements.
As far as Pool Agreements are concerned, the report highlights the industry’s move away from traditional ‘pools’ in favour of “heterogeneous and less restrictive alternatives [that are] potentially more competitive” e.g. broker-led co-(re)insurance. It also notes how many pool arrangements already fall outside the scope of the IBER, with the Commission having found fewer than 50 institutionalised pools that are potentially covered.
As a next step, the Commission is organising a stakeholder meeting on 26 April, details of which are available on the Commission’s press release. Stakeholder feedback, as well as the results of further studies, will contribute to the Commission’s final proposals in early 2017. Based on this report, it is likely to prove difficult to shift the Commission from its current view that the IBER should not be renewed.
Becket McGrath and Natalie Lewis