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Brussels, 24 March 2010

Antitrust: Commission adopts new Block Exemption Regulation for insurance sector

The European Commission has adopted a new Regulation that block exempts certain types of agreements in the insurance sector from the EU's general prohibition of practices restrictive of competition. The new Block Exemption Regulation (BER), which will come into force on the 1st of April, renews two of the four categories of agreements currently exempted, namely joint compilations, tables and studies, and co(re)insurance pools, with some amendments. Certain information exchange can be justified in order to allow insurers to accurately assess risks. Pooling is also important in order to ensure that all risks can be covered. These two types of agreements justify a block exemption. Other types of cooperation may also be legal but it will be for insurers to self-assess that they comply with the general competition rules.

"The block exemption continues to be justified for pools and certain types of information exchange necessary for the industry to be able to carry out its business. This is in the interest of consumers and of the economy as a whole. The Commission together with the national competition authorities will see to it that the industry does not use the exemption as a blanket protection and will enforce competition rules where and whenever necessary", said Joaquín Almunia, Commission Vice-President in charge of Competition Policy.

After a detailed review of the functioning of the current BER adopted in 2003 and which expires at the end of March, the Commission has adopted new rules that continue to exempt two forms of cooperation specific to the insurance sector, namely agreements in relation to joint compilations, tables and studies and co(re)insurance pools. This new regulation will be valid until 31 March 2017.

Certain information exchange is important for the insurance sector because large amounts of data are required in order for companies to assess the costs of covering risks. Access to the data is also crucial to facilitate the entry of new or foreign market players. Key changes to the exemption for information exchange are:

  • a new right of access to the results of the information exchange for customer and consumer organisations, except for public security reasons; and

  • clarifications to the scope of the exchange of information covered by the BER.

The new BER also exempts, subject to certain strict conditions pools (common coverage of risks by insurance companies) which cover either "new" risks or fall below certain market share thresholds if they cover risks which are not "new". This helps to ensure that all risks can be covered by insurance companies. The key changes to this exemption are:

  • a change to the approach to market share calculation in order to bring it into line with other general and sector-specific competition rules so that not only gross premium income earned within the pool by the participating undertakings, but also outside the pool will be taken into account;

  • a broadening of the definition of "new risks" to cover risks the nature of which has changed so materially that it is not possible to know in advance what subscription capacity is necessary in order to cover such a risk.

The review of the previous BER showed that neither agreements on standard policy conditions nor agreements on security devices are specific to the insurance sector. They are therefore excluded from the new BER. The Commission, however, plans to address both of these types of agreements under the EU Guidelines on horizontal cooperation agreements, which are currently being reviewed.

The Commission will cooperate with national competition authorities, which have been closely involved in the BER review exercise, to ensure that insurance companies and in particular pools, assess correctly whether their agreements meet the exemption conditions and do not use the BER as a blanket protection.

Before the entry into force of Council Regulation 1/2003 on the application of the competition rules, companies had to notify agreements or concerted practices to the Commission to obtain clearance under the competition rules. As of 1 May 2004, Regulation 1/2003 abolished the notification system and introduced the principle that companies need to assess for themselves whether their agreements are compatible with the ban on restrictive business practices (Article 101 of the Treaty). This principle applies to all sectors, including the insurance sector. Sector specific rules are now rare and in order to determine whether the BER should be renewed, the Commission examined whether the insurance sector presents specificities that trigger an enhanced need for cooperation and if so, whether a specific legal instrument is necessary in order to protect or facilitate that cooperation.

The full text of the new Block Exemption Regulation as well as the explanatory accompanying Communication are available at:

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