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EU sector investigation into business insurance: final report published

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25/09/2007
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On 25 September 2007, the European Commission published the findings of its sector investigation into business insurance. The final report has raised concerns in two areas: first, alignment of premiums in the coinsurance and reinsurance markets; and second, transparency of remuneration and conflicts of interest in insurance brokerage.

In terms of the alignment of prices in coinsurance and reinsurance markets, the Commission is particularly concerned about the prevailing practice in the marketplace which excludes participants in the “follow market” from offering lower premiums than that offered by the lead insurer. It believes this practice may not comply with competition law and is inviting the industry to either justify this practice or reform it. However, it has added that it does not intend to apply its findings retroactively.

As regards intermediaries, the Commission believes that conflicts of interest and lack of transparency on remuneration may lead to less competition and higher prices, especially for small and medium sized enterprises. The Commission states that it “is committed to follow up these findings in the framework of the review of the Insurance Mediation Directive which has already started”.

The Commission noted that it “has yet to be persuaded” that the insurance sector block exemption is still necessary, but that it will review this issue definitively in a report in March 2009.

Please click here for the Commission’s press release. The final report and the Commission’s working document are also available.

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