Airmic calls for renewal of the Insurance Block Exemption Regulation

Airmic has written to the European Union to voice its support for the (re)insurance industry’s exemption from anti-competitive laws, which the association believes is vital for maintaining the health of the London subscription market.

Insurers and reinsurers currently benefit from a block exemption regulation (BER) that allows certain practices that would otherwise be in breach of the prohibition on anti-competitive practices in the EU. The exemption is due to run out in 2017 and the EU is currently considering the case for renewal.

Airmic believes that its members benefit from the collective capacity of the market in order for it to co-operate fully on wordings and ensure it is able to offer effective layers of cover within single contracts involving multiple insurers.

The association told the EU that the BER is the best legal instrument to ensure a consistent enforcement of exemptions from competition laws because it is “clear and unambiguous”. It warned that the continued operation of the London subscription market in its current form may be threatened by its removal. It also argued that the current system ensures that a risk covered by a (re)insurance pool won’t be challenged unilaterally by the national competition authority.

“There is no evidence, anecdotal or otherwise, that current practice has inhibited competition in any way. Indeed, the market is probably as competitive as it has ever been,” Paul Hopkin, Airmic technical director commented. “The removal of the BER could in fact result in reduced choice for customers and higher premiums.”

FERMA, the federation of European risk management associations, has also written to the EU to support the renewal of the BER.

Its president Julian Graham said: "Non-renewal of the block exemption would change radically the coverage of certain type of risks, but not widen choice for commercial insurance buyers…it is our priority to ensure that policymakers are well aware of the unintended consequences of a non-renewal decision on the scope of coverage and the level of prices for our largest and most exceptional risks."