The 16-member Federation of European Risk Management Associations (FERMA) issued a statement that it “welcomes the European Commission (EC) Report in favor of renewal of the Insurance Block Exemption Regulation (BER).”
The EC has been examining whether this exemption, which excludes insurers from otherwise applicable anti-competition regulations, should be continued. They were first granted in 2003, and are currently scheduled to expire in 2010. FERMA has been one of the leading organizations in efforts to extend the exemption.
The bulletin pointed out that the “legal certainty provided by the current BER has fostered cooperation among insurers to create competitive insurance markets with sufficient capacity to meet the needs of large international insurance programmers. A renewed BER in March 2010 will continue to achieve this fundamental objective by exempting joint calculations, tables and studies, and co-(re)insurance pools from EU competition rules.”
The statement also approved the EC’s actions on joint calculations and studies, an issue raised by “large commercial buyers.” It agrees that there’s a “continued need for a BER in this area. Joint calculation on the actual cost of risk is key to market access by new entrants. While the Commission intends to clarify existing boundaries and to limit the scope of exemption to valuable information exchange, FERMA welcomes the transparency initiative, which would allow insurance buyers to take part in and to have access to data jointly generated by insurers.”
“In relation to pools, the Commission finds that renewal of the BER is necessary not only to clarify the safe harbors, but also to induce compliance by pool members. FERMA agrees with this approach while recognizing that pools should be a last resort to cover risks that are new or difficult to insure where a large capacity is required. FERMA believes that pools should be an alternative to commercial insurers and operate in a competitive environment. FERMA will articulate views and recommendations to ensure that pooling arrangements operate to the benefit of large commercial buyers.
“Finally, FERMA takes note that the Commission has not endorsed the view of the industry to the effect that cooperation in relation to standard policy conditions (SPCs) should continue to be covered by the BER. Cooperation on SPCs is, however, very valuable to large commercial buyers as it reduces transaction costs, facilitates the comparison between policy conditions and provides better contract certainty. Accordingly, FERMA believes that, to the extent that SPCs will fall outside of the BER, the Commission should at the very least issue guidance so as to provide sufficient comfort and legal certainty as of March 2010.”
The President of FERMA, Marie-Gemma Dequae, commented: “FERMA is pleased with the Commission’s support for renewal and will continue to be closely involved in the debate for the adoption of a recast BER next year.”
Source: FERMA – www.ferma.eu
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