PROPOSAL FOR A COUNCIL REGULATION ( EEC ) ON THE APPLICATION OF ARTICLE 85 ( 3 ) OF THE TREATY TO CERTAIN CATEGORIES OF AGREEMENTS, DECISIONS AND CONCERTED PRACTICES IN THE INSURANCE SECTOR
Date: 1989-12-18
Institutions: European Commission
Subjects: insurance, insurance company, inter-company cooperation, restriction on competition, restrictive trade practice

COMMISSION  OF  THE  EUROPEAN  COMMUNITIES 

C0MC89) 641  final 

Brussels, 18 December  1989 

Proposal  for a 

COUNCIL  REGULATION  (EEC) 
on the application  of Article 85(3) of the Treaty  to certain 
categories  of agreements, decisions  and  concerted 
practices  in the  insurance  sector 

(presented  by the  Commission) 

ëxp ) snatory^Vjgcio^andum 

Reasons for  the adoption of a regulation 

In  Its  judgment  of  27  January  1987  (German  Fife  insuranca,  Csse 

45/85)C'  the  Court  of  Justice  stated  that  the  Insurance  sector  was 

fully  subject  to  Articles  35  and  86  ana  to  Regulation  No  17,  thus 

clearly  rejecting  the  view,  which  at  times  had  been  expressed  in  the 

past,  that  the  prohibition  of  Article  85(1) was  not  applicable  to  the 

insurance  sector  until  an  implementing  regulation  based  on  Article  87 

paragraph  2(c) had been  adopted. 

Pursuant  to  discussions  between  the  Commission  and  the  "Comité 

Européen  des Assurances", most  insurers and  their  associations  decided 

to  notify  their  agreements  and  recommendations.  Approximately  300 

notifications  have  been  received  so  far  by  the Commission;  this  number 

may be expected  to  increase  In the near  future. 

An  examination  of  these  notifications  has  shown  that  only  a  few  of 

them  remain  outside  the  scope  of  application  of  Article  85(1),  either 

because  they  are  to be  regarded  as neutral  with  respect  to  competition 

law  (for  Instance  certain  codes  of  conduct  for  the  prevention  of 

certain  forms  of  unfair  competition)  or  because  they  are  covered  by 

the Commission's  Notices  of  July  1968 concerning  agreements,  decisions 

and  concerted  practices  In  the  field  of  cooperation  between 

enterprises^2^  or  of  September  1986  concerning  agreements  of  minor 

importance.<3)  The  other  notifications  concern  agreements,  decisions 

and  concerted  practices  which  faii  within  the  scope  of  application  of 

Article  35(1).  They  consist  to a  large extent  of  typical  agreements or 

standardised  terms  of  business  used  regularly  and  in  large  numbers  by 

Insurance  companies  when  concluding  Insurance  contracts  with  policy 

holders or  as a basis  for  cooperation with other  insurance  companies. 

(1) (1987) ECR 405, 447. 

(2) 0J  C 75, 297.1968, p. 3. 

(3) 0J C 231 , 12.9.1986, p. 2 

2. 

- 2 

In  view  of  the  quantity  of  notifications  which  poses  serious  problems 

regarding  the  Individual  treatment  of  each  case,  the  Commission 

envisages  a  general  solution  in  the  form  of  group  exemption.  The 

adoption of  such  group  exemption would  have  the advantage  of  providing 

for  a  legal  framework  which  would  leave  the  Insurance  companies 

concerned  a sufficient  degree of  flexibility  regarding  the  drafting  of 

their  contracts.  Moreover,  such  exemption  would  give  the  parties  the 

benefit  of  the  highest  possible  degree  of  legal  security,  in  the 

present  case, the material  prerequisites  for  the establishment  of  group 

exemptions  are  found  to  exist.'  The  notifications  received  by  the 

Commission  show  the  existence  of  a  number  of  frequently  occurring 

groups  of  agreements  and  concerted  practices  defined  on  the  basis  of 

abstract  criteria, which  are eligible  for  a general  exemption  from  the 

prohibition of cartels. 

I I. Orientations with  respect  to the future contents of  the envisaged  group 

exempt Ion 

The Commission  proposes  to adopt  a group exemption once  it has, through 

the  treatment  of  individual  cases,  gained  sufficient  experience  to 

comprehensively  assess  the  relevant  restrictions  of  competition  under 

Article 85(1) and (3). 

The  Commission's  practice  has  already  led  to  a  clarification  of  a 

number  of  Important  questions,  in  Its  decisions  "Nuovo  Cegam"(4>  and 

"Fire  Insurance",<5)  the  Commission  clearly  expressed  its  view  that 

cooperation  between  Indemnity  Insurers  In  which  loss  statistics  are 

Jointly  analysed  and  In  which  common  risk  premium  tariffs  based  on 

common  accident  statistics,  excluding  any  loading  Instruments  such  as 

administrative  costs,  Intermediation  costs  and  profits  (pure  premiums) 

are  elaborated  and  applied,  may  be  acceptable.  However,  such  would  In 

(4) OJ  L  99,  11.4.1984,  p.  29;  14th  Report  on  Competition  Policy 

(1984), point  76. 

(5) OJ  L  35,  7.2.1985,  p.  20;  14th  Peport  on  Competition  Policy 

(1984), point 75. 

3 

principle  not  be  the  cas** where  the  cooperation  lad  to  the  elaboration 

of  commercial  premium  tariffs  (I.e.  the  premiums  actually  charged  to 

policy  holders  comprising  the  above-mentioned  loading  instruments).i6^ 

This position  has been  confirmed  by  the Court  of  Justice  in the  above-

mentioned  "German  Fire  insurance"  c a s e .^  In  Its decision  "Protection 

and  indemnity  Ciubs"^8^  the Commission  considered  agreements  on  mutual 

insurance  to  be  eligible  for  exemption  under  certain  circumstances. 

Moreover,  the  Commission  will  soon  adopt  two  further  exemption 

decisions 

concerning 

respectively 

a 

reinsurance 

pooi^9^ 

and 

cooperation  in the field of  Jncustriai  fire  Insurance.(lQ) 

The  Commission  Intends  to deal  with  additional  Individual  cases  by way 

of  formal  decision,  or  administrative  'comfort'  letter  after 

publication  of  the  main  contents  of  the  agreements.  With  a  view  to 

preparing  this  programme,  the Commission  has undertaken  an  examination 

and evaluation of  the pending  notifications which  permits  the following 

conclusions  to  be  drawn  regarding  the  contents  of  the  future  group 

exempt ion. 

It  Is  proposed  that  this  cover  types  of  agreements,  decisions  and 

concerted  practices  concerning: 

-  the elaboration  and  application of  common  risk  premium  tariffs  based 

purely  on  collectively  ascertained  statistics  or  loss  experience 

and/or of standard  policy  conditions; 

-  cooperation  In  the  field  of  co-insurance  and  reinsurance.  In 

particular  in the forms of groups and pools; 

-  cooperation  In respect  of  claims settlement  procedures; 

-  cooperation  in respect  of  testing and acceptance of security devices; 

-  cooperation  in respect  of  registers of  and  Information  on  aggravated 

risks. 

(6) See  also  Notice  pursuant  to  Article  19(3)  of  Council  Regulation  No 

17/62, oj C 259, 12.10.1989, p. 3 "Concordato  ItaMano  Incendio". 

(7) See reference No 1. 

(8) OJ  L  376,  31.12.1985,  p.  2;  15th  Report  on  Competition  Policy 

(1985), point  69. 

(9) Notice  pursuant  to  Article  19(3)  of  Council 

^ulation  No  17/62,  OJ 

C 203, 8.8.1989,  p.  2 "Teko"• 

(101» See  reference No 6. 

4 

- 4 -

Basically,  the  conditions  under  which  such  agreements  could  be  exempted 

are  the  fol lowing  : 

- Common  risk  premium  tariffs  basea  purely  on  collectively  ascertained 

statistics  or  ioss  experience  may  only  be  elaborated  If  they 

constitute  common  actuarial  calculations  based  on  joint 

ioss 

statistics  with  the  aim  to  provide  a  technical  balance  on  which  the 

insurance  industry  can  operate,  to  the  exclusion  of  any  loadings  for 

instance  for  Intermedial les'  commissions,  administrative  costs  or 

profits.  As  the  Court  of  Justice  found  in  Its above-mentioned  ruling, 

an  exemption  may  in  principle  not  be  granted  for  commercial  premium 

tariffs,  i.e.  tariffs  that  Include  not  only  the  cover  of  costs 

Incurred  in  relation  to  claims  Insured,  but  also  such  supplementary 

loadings  as  described  above.  Such  tariffs  should  furthermore  only  be 

exempted  if  they  are  established  as  non-binding  recommendations, 

leaving  the  participants  free  to  depart  from  them. 

-  Standard  policy  conditions,  although  positive  in  the  sense  that  they 

permit  a  comparison  of  the  extent  of  coverage  and  prices,  thus 

contributing  towards  transparency  for  consumers,  should  only  be 

exempted 

If  they  are 

Issued  as  recommendations 

leaving 

the 

participating  companies  free  to  depart  from  the  standard  to  meet 

Individual  customers'  needs.  Furthermore,  standard  policy  clauses 

should  not  unduly  restrict  competition,  for  example  by  uniform 

recommendation 

of 

a  very 

long  contractual 

duration 

without 

corresponding  economic  advantages,  thus  unduly  preventing  policy 

holders  from  seeking  cover  with  competing  companies,  or  by  generally 

recommending  standard  conditions  systematically  excluding  particular 

types  of  cover,  (e.g.  for  natural  catastrophes  or  nuclear  accidents). 

This  exemption  cannot,  and  does  not,  affect  Member  States'  right  to 

enact  and  apply  their  own  consumer  protection  legislation  In  this 

area,  provided  this  remains  within  the  limits set  by  Community  law. 

Agreements,  décrions  al^c* ccrtfe,';1^  ;?i/ict Ices»  by  which  inr^'cn-;:;; 

companies  cooperate  to  set  tip co-Insurance  or  reinsurance  (or  mixed 

fo-Insurance and reinsurance»  arrangements, especially  in the  form of 

pools  or  groups,  ,•.;*'• it  positive  consideration  in  particular  whera 

they  open  the market  for  companies  which  otherwise  cou id not  eastiy 

enter  it a'one, due  to  limited earacity cr expertise, or  if they  lead 

to  a  coverage  of  such  risks  the':  «re  not  usually  covered  by 

individual  companies.. Although  such  schemes may  restrict  competition 

between  the participating  companies  In the  reinsurance  and/or  in the 

direct  insurance  field,  they  cou id  be  exempted  under  the  condition 

that effective competition on  the market  Is guaranteed. 

However, such  agreements  should  not  be exempted  if there  is a danger 

of  monopolization  of  the  market  or  if  their  rules  would  enable  a 

participant  to  abuse  its  economic  power.  Additionally,  they  should 

not be construed  In such a way as to make parties  lose their  autonomy 

completely  and  they  should  not  entirely  prevent  parties  from  seeking 

reinsurance  cover  or  participating  In  a  co-Insurance  arrangement 

elsewhere. 

Regarding  arrangements  on  accelerated  and  simplified  procedures  for 

the  settlement  of  claims, especially  in  the  case  of  damages  covered 

by  several  insurance  contracts, such  arrangements  do not, as  a rule, 

restrict  competition.  Nevertheless,  they  should  not  be  applied  in a 

way detrimental  to the  interests of policy-holders. 

Cooperation  arrangements  In  the  field  of  testing  and  acceptance  of 

security  devices  have  the  advantage  of  facilitating  underwriting  by 

eliminating  the  need  for  individual  examination  in  each  particular 

case.  They  can  be  considered  eligible  for  exemption  if  the  approval 

systems  themselves  are  open  to  all  manufacturers  or  fitters,  are 

based  on  purely  objective  and  Qualitative  criteria  and  do  not 

dissuade  persons  from  submitting  to  this  system  by  way  of 

disproportionate  cost.  Such  arrangements  are  frequently  accompanied 

by  recommendations  aimed  to  ensure  that  the  granting  or  refusal  of 

approval  is  reflected  in  some  way  in  the  participating  companies' 

underwriting  or  rating  po!ic»es.  Recommençât lone, of  this  kind  would 

oniy  oe  acceptable  if  they  remain  pure;  nor-bindlng  terms  of 

?efe?fne"5.  iea'-'i^g  l'^c  c-^moar-•*?£. tree to d-^nrt  fron  those ;?taf".dards... 

-  cooperation  between  insurers  with  regard  to  registers  of  or 

information  systems  on  aggravated  risks  can  help  to  prevent  fraud. 

Although  in  general  not  aimed  at  a  restriction  of  competition, 

participation  in such  systems  should  not  be obligatory  and  should  not 

deprive  companies  of  the  possiblIIty  to  Insure  such  risks  at  their 

own  evaluation.  Further,  they  should  not  be operated  to  the  detriment 

of  the  consumer. 

In  the  group  exemption  regulation,  an  'opposition  procedure'  should  be 

foreseen,  so  that  companies  may  notify  their  arrangements  in  cases  of 

doubt  of  legality  of  certain  provisions  with  regard  to  the  regulation. 

The  benefit  of  this  procedure  should  be  accorded  to  provisions  which 

have  not  been  explicitly  exempted  but  which  nevertheless  do  not  fall 

under  the  category  of  unacceptable  or  'black' clauses. 

III. Procedural  aspects 

Before  the  Commission  may  establish  a  group  exemption,  it  Is 

necessary  that  the Council  adopt  an enabling  regulation  under  Article 

87(2)(b)  of  the  EEC  Treaty,  empowering  the  Commission  to  declare, 

pursuant  to  Article  85(3),  that  Article  85(1)  does  not  apply  to 

certain  categories  of  agreements,  decisions  and  concerted  practices 

In the  insurance  sector. 

The  proposal  annexed  hereto  takes  into  account  the  orientation 

described  above.  The  draft  Council  regulation  Is conceived  along  the 

lines of  Regulations  No  19/65 and  No 2821/71. 

? 

- 1 -

Proposal  for a 

CQUNCII  RFfiHIATTON  (FFP 

on the application of Article  85(3) of the Treaty  to certain 

categories of agreements, decisions and  concerted 

practices  In the  insurance sector 

THE COUNCIL OF THE  EUROPEAN  COMMUNITIES, 

Having  regard  to  the  Treaty  establishing  the  European  Economic 

Community,  and  in particular  Article 87 thereof, 

Having  regard  to the proposal  from  the  Commission, 

Having  regard  to the Opinion of  the European  Parliament, 

Having  regard  to the Opinion of  the Economic  and Social  Committee, 

1. Whereas  Article  85(1) of  the  Treaty  may, in accordance  with  Article 

85(3),  be  declared  inapplicable  to  categories  of  agreements, 

decisions  and  concerted  practices  which  fulfil  the  conditions 

contained  in Article  85(3); 

2. Whereas  the  provisions  for  the  implementation of  Article  85(3) must 

be adopted  by way of  regulation  pursuant  to Article 87; 

3. Whereas cooperation between undertakings  in the  Insurance sector  is, 

to  a  certain  extent,  desirable  to  ensure  the  proper  functioning  of 

this  sector  and  may  at  the  same  time  promote  the  Interest  of 

consumers; 

4. Whereas  exemptions  under  Article  85  (3)  cannot  themselves  affect 

Community  and  national  provisions  promoting  the  Interests  of 

consumers  in this sector; 

5. Whereas  agreements,  decisions  and  concerted  practices  serving  such 

aims  may,  insofar  as  they  fall  within  the  prohibition  contained  in 

Article  85(1),  be  exempted  therefrom  under  certain  conditions; 

whereas  this  applies  particularly  to  agreements,  decisions  and 

concerted  practices  relating  to  common  risk  premium  tariffs  based 

purely  on  collectively  ascertained  statistics  or  loss  experience, 
standard  policy  conditions,, common  coverage  of certain  types of 

? 

risks,  the  settlement  of  claims,  the  testing  and  acceptance  of 

security  devices,  and  registers  of  and  Information  on  aggravated 

rIsks; 

6. Whereas  In  view  of  the  large  number  of  notifications  submitted  in 

pursuance  of  Council Regulation No 17,(1)

 as  last  amended  by  the  Act  of 

Accession  of  Spain  and  Portugal,  it  Is  desirable  that  In ordc  to 

facilitate  the  task  of  the  Commission  it  should  be  enabled  to 

declare by way of  regulation  that  the provisions of Article 85(1) do 

not  apply  to  certain  categories  of  agreements,  decisions  and 

concerted  practices; 

7. Whereas  It  should  be  laid  down  under  which  conditions  the 

Commission,  in  close  and  constant  liaison  with  the  competent 

authorities of  the Member  States, may exercise such powers; 

8. Whereas  under  Article  6  of  Regulation  No  17  the  Commission  may 

provide  that  a  decision  taken  in  accordance  with  Article  85(3)  of 

the  Treaty  shall  apply  with  retroactive  effect;  whereas  It  Is 

desirable  that  the  Commission  be  empowered  to  issue  regulations 

whose provisions are to the  like effect; 

9. Whereas  under  Article  7  of  Regulation  No  17  agreements,  decisions 

and  concerted  practices  may,  by  decision  of  the  Commission,  be 

exempted  from  prohibition,  In  particular  If  they  are  modified  In 

such  manner  that  Article  85(3)  applies  to  them;  whereas  It  is 

desirable  that  the Commission  be enabled  to grant  by  regulation  like 

exemption  to  such  agreements,  decisions  and  concerted  practices  if 

they  are  modified  In  such  manner  as  to  fall  within  a  category 

defined  in an exempting  regulation; 

10. Whereas  the  possibility  cannot  be  excluded  that,  in  a  specific 

case, the conditions set out  in Article 85(3) may not  be fulfil led; 

whereas  the  Commission  must  have  power  to  regulate  such  a  case  in 

pursuance  of  Regulation  No  17 by way  of  decision  having  effect  for 

the future, 

HAS ADOPTED THIS REGULATION : 

(1) 0J  No  13 of  21.2.1962, p. 204/62. 

Article 1 

1. Without  prejudice  to  the  application  of  Regulation  No  17  the 

Commission  may,  by  Regulation  and  In  accordance  with  Article  85(3) 

of  the  Treaty,  declare  that  Article  85(1)  shall  not  apply  to 

categories  of  agreements  between  undertakings,  decisions  of 

associations  of  undertakings  and  concerted  practices  In  the 

insurance  sector  which  have  as  their  object  cooperation with  respect 

to : 

(a) common  risk  premium  tariffs  based  purely  on  collectively 

ascertained  statistics or  loss experience; 

(b) common  standard  policy  conditions; 

(c) the  common  coverage  of  certain  types of  risks; 

(d) the settlement  of claims-, 

(e) the  testing  and  acceptance  of  security  devices; 

(f) registers of  and  information  on  aggravated  risks. 

2.  Such  regulation  shall  define  the categories of  agreements,  decisions 

and  concerted  practices  to  which  It  applies  and  shall  specify  in 

particular  : 

(a) the  restrictions  or  clauses which  may, or may  not,  appear  In the 

agreements, decisions  and  concerted  practices; 

(b) the clauses which  must  be contained  In the  agreements,  decisions 

and  concerted  practices  or  the  other  conditions  which  must  be 

satIsfled. 

o 

-  4 -

Article  2 

Any  Regulation  pursuant  to Article  1 shall  be made  for  a  specified 

perlod. 

It may  be  repealed  or  amended  where  circumstances  have  changed  with 

respect  to any  of  the  facts which were  basic  to  Its being  made;  In 

such  case,  a  period  shall  be  fixed  for  modification  of  the 

agreements,  decisions  and  concerted  practices  to  which  the  earlier 

Régulât ion applles. 

Article  3 

A Regulation  pursuant  to Article  1 may  provide  that  it shall  apply  with 

retroactive  effect  to  agreements, decisions  and  concerted  practices  to 

which,  at  the  date  of  entry  Into  force  of  that  Regulation,  a  decision 

issued  with  retroactive  effect  In pursuance  of  Article  6 of  Regulation 

No 17 would  have applied. 

Article  4 

1. A  Regulation  pursuant  to Article  1 may  provide  that  the  prohibition 

contained  In Article  85(1)  shall  not  a p p l y,  for  such 

period  as  shall  be  fixed  by  that  Regulation,  to  agreements, 

decisions  and  concerned  practices  already  In existence  on  13  March 

i  1962 which do not  satisfy  the conditions of Article  85(3), where' : 

-within  six  months  from  the  entry  into  force  of  the  Regulation, 

they  are  so  modified  as  to  satisfy  the  said  conditions  In 

accordance with  the provisions of  the Regulation; and 

-  the  modifications  are  brought  to  the  notice  of  the  Commission 

within  the time  limit  fixed by  the Regulation. 

$ 

J< 

—  * 

,„. 

The  provisions  of  the  first 

subparagraph  shall  apply  In  the  same 

way  to  agreements,  decisions  and  concerted  practices  existing  at  the 

date  of  accession  of  new  Member  States  to  which  Article  85(1) 

applies  by  virtue  of  accession  and  which  do  not  satisfy  the 

conditions  of  Article  85(3). 

2.  Paragraph  1  shall  apply  to  agreements,  decisions  and  concerted 

practices  which  had  to  be  notified  before  1  February  1963,  in 

accordance  with  Article  5 of  Regulation  No  17, only  where  they  have 

been  so  notified  before  that  date. 

As  regards  agreements,  decisions  and  concerted  practices  existing 

at  the  date  of  accession  of  new Member  States  to which  Article  85(1) 

applies  by  virtue  of  accession  and  which  had  to  be  notified  within 

six  months  from  the  date  of  accession  in  accordance  with  Articles  5 

and  25  of  Regulation  No  17, paragraph  1 shall  not  apply  unless  they 

have  been  so  notified  within  this  period. 

3.  The  benefit  of  the  provisions  laid  down  pursuant  to  paragraph  1  may 

not  be  claimed  in actions  pending  at  the  date  of  entry  into  force  of 

a  regulation  adopted  pursuant  to Article  1;  neither  may  it be  relied 

on  as grounds  for  claims  for  damages  against  third  parties. 

Article  5 

Before  making  a  regulation,  the  Commission  shall  publish  a  draft 

thereof  to  enable  all  persons  and  organizations  concerned  to  submit 

their  comments  within  such  time  limit,  being  not  less  than  one  month, 

as  the  Commission  shall  fix. 

i 

- 6 -

Article 6 

1. The  Commission  shall  consult  the  Advisory  Committee  on  Restrictive 

Practices and Monopolies : 

(a) before publishing  a draft  regulation; 

(b) before adopting a regulation. 

2. Except  where otherwise provided  by this Regulation, paragraphs 5 and 

6  of  Article  10 of  Regulation  No  17, relating  to  consultation  with 

the  Advisory  Committee,  shall  apply;  joint  meetings  with  the 

Commission  shall  however  take place not earlier  than one month after 

dispatch of  the notice convening  them. 

Article 7 

Where  the Commission, either  on  Its own  Initiative or at  the request of 

a  Member  State  or  of  natural  or  legal  persons  claiming  a  legitimate 

Interest,  finds  that  In any  particular  case  agreements,  decisions  and 

concerted  practices  to which  a regulation made pursuant  to Article  1 of 

this  Regulation  applies  have  nevertheless  certain  effects  which  are 

Incompatible  with  the  conditions  laid  down  in  Article  85(3), 

it  may  withdraw  the  benefit  of  application  of  that  regulation 

and  take a decision  in accordance with Article 6 and 8 of Regulation No 

17,  without  any  notification  under  4(1)  of  Regulation  No  17  being 

required. 

This  Regulation  shall  be  binding  in  its  entirety  and  directly 

applicable  in all Member  States. 

Done at Brussels, 

For the Council 

/3 

ISSN 02^4-1475 

COM(89) 641 final 

DOCUMENTS 

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