Opinion of the Economic and Social Committee on the 'Report to the European Parliament and to tha Council on the operation of Commission Regulation (EEC) No 3932/92 concerning the application of Article 81 (ex-Article 85), paragraph 3, of the Treaty to certain categories of agreements, decisions and concerted practices in the field of insurance'
Date: 1999-12-09
Institutions: European Economic and Social Committee
Subjects: insurance, insurance company, inter-company cooperation, restriction on competition, restrictive trade practice

23.2.2000

EN

Official Journal of the European Communities

C 51/105

Opinion of the Economic and Social Committee on the ‘Report to the European Parliament and
to the Council on the operation of Commission Regulation (EEC) No 3932/92 concerning the
application of Article 81 (ex-Article 85), paragraph 3, of the Treaty to certain categories of
agreements, decisions and concerted practices in the field of insurance’

(2000/C 51/24)

On 8 July 1999, the Economic and Social Committee, acting under the third paragraph of Rule 23 of its
Rules of Procedure, decided to draw up an opinion on the above-mentioned report.

The Section for the Single Market, Production and Consumption, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 25 November 1999. The rapporteur was
Mr Ravoet.

At its 368th plenary session (meeting of 9 December 1999), the Economic and Social Committee adopted
the following opinion unanimously.

1.

Introduction

1.5.

This opinion is designed to:

1.1.
The European Commission has presented a report
(COM(1999) 192 final) to the Council and the European
Parliament on the application of the exemption regulation to
insurance companies for certain categories of agreement under
the provisions of the Treaty in the area of competition [Article
81(1)].

1.2.
The 1993 Council empowering regulation required the
Commission to report on the application of this particular
system within a period of six years. The Economic and Social
Committee agrees that the report comes at a good time in
terms of preparing the sequel to the policy followed under the
exemption regulation, which will cease to apply as of March
2003.

1.3.
The Committee welcomes the consultation process set
up by the Commission for this report, particularly with the
national authorities and courts responsible for matters of
insurance and competition. The Committee hopes that the
Commission will ensure the national bodies are unambiguous
in their application of competition provisions. It believes that
the risks of divergence are all the greater given that their
decisions are based on both legal and economic criteria. For
this reason, it is important to understand the methodologies
and frameworks they are using. The prospect of decentralised
responsibility for applying Community competition law, as
heralded by the Commission’s White Paper of 28 April 1999,
heightens this concern.

The Committee would refer to its opinions (1) on
1.4.
the Council empowering regulation and the Commission
exemption regulation.

(1) OJ C 182, 23.7.1990, p. 27 and OJ C 19, 25.1.1993, p. 97.

— establish the context in which the provisions must be

assessed;

— give a general assessment of the Commission report; and

— make a number of comments on specific points raised

by it.

2. General comments

The Committee would underline its commitment to
2.1.
free and effective competition as a factor in economic progress,
and as a factor of benefit to the consumer. It is therefore keen
to ensure that derogations with regard to certain activities
remain the exception and that they are not interpreted in such
a way as to extend their scope.

2.2.
The exemption regulation that covers insurance com-
panies for certain types of agreement corresponds to the
concern, expressed in Article 81(3) of the Treaty, to authorise
agreements that contribute to technical or economic progress
or to improving the production or distribution of products,
providing consumers derive benefit from them.

2.3.
Before the block exemption system came into force,
the Commission was notified of a large number of insurance
sector agreements falling into this category, for reasons often
specific to this particular economic activity. The Committee
welcomed the simplification that came with the adoption of
the block exemption system, as it lifted some of the burden
It now notes that the
of weighty administrative control.
Commission has consolidated its experience, and is in a
position to continue application of the exemption regulation.

C 51/106

EN

Official Journal of the European Communities

23.2.2000

2.4.

The insurance business features:

3. Specific observations

— a price-setting mechanism which differs from that found
in most other economic activities in that the cost price
elements are located in the future in relation to the
premiums and contributions collected (inverted pro-
duction cycle); the Committee notes that insurance price
formation is also influenced by the fact that Member States
make certain types of
this is
reflected in rigid demand and the application of price
controls to certain types of insurance in several Member
States; the Committee would point out that the effect of
such price regulation is to reduce companies’ competi-
tiveness;

insurance compulsory;

— the role of protecting insured parties and their dependants,
making it essential that insurance companies do not go
bankrupt; this is especially important when companies
in particular regarding
have long-term commitments,
retirement, where their role is becoming increasingly
important;

— technical and legal complexity, which means it is often
helpful for the consumer to be able to find common points
of reference, to ensure greater transparency and a better
understanding of contractual commitments;

— the need for access to major financial resources in order to
meet market requirements, a need that exceeds the financial
capacities of single companies.

2.5.
These particularities doubtless explain the time that
was needed to draw up competition rules specifically applicable
to the insurance sector. The balance they demand between the
objectives of running the single market smoothly, protecting
consumer interests, and the efficient use of the Commission’s
administrative resources, justify what is definitely an excep-
tional system.

2.6.
The Commission is quite right to state in its report that
the entry into force of the exemption regulation coincided
with that of the ‘third generation’ directives, putting the
finishing touches to the completion of the single market in the
insurance sector. Furthermore, the Commission seeks in the
exercise of
its responsibilities to strike the right balance
regarding the freedom the single market offers the industry’s
operators.

The European insurance industry has undergone major
2.7.
changes since the beginning of the decade. These include, in
particular, the end of the prior approval system for tariffs and
conditions, the growth of cross-border competition, important
mergers and acquisitions, also with other financial establish-
ments, and the advent of new operators, technologies and
sales channels.

3.1.

Joint technical statistics

The Committee accepts that the need to ensure
3.1.1.
successful conclusion of
insurance operations warrants
insurance companies having access to statistics that are as
reliable and representative of the market as possible. It believes
that the system set up by the exemption regulation should be
preserved, while ensuring that collective statistical work
remains strictly indicative. The Committee joins the Com-
mission in welcoming the fact that this work facilitates market
access for the highest possible number of operators. It believes
it is appropriate that the large companies should take part in
these joint studies, as this increases the reliability of the
findings.

3.1.2.
The Committee believes that the compilation of
more detailed joint statistics enables operators to fine-tune
their underwriting policies,
sharpening competition and
increasing the reliability of technical calculations.

3.1.3.
The Committee would recommend that these studies
be made accessible to any operators interested, subject to
reasonable conditions. Consumers should be able to obtain
information, for instance by means of watchdog authority
publications, on the part this data plays in the calculation of
premiums.

3.2. Standard policy conditions

3.2.1.
In the Committee’s view, the interested parties —
insurers, intermediaries and consumers — should be able to
refer to illustrative conditions. Standard clauses are pointers,
and a means of assessing the extent of cover. The report states
in point 23 that the Commission intends to review the system
established under Article 7(1), which lists standard exclusions,
cover subject to standard conditions, and extension of standard
cover to include risks to which a significant number of
policyholders are not exposed.

The Committee notes the Commission’s general
3.2.2.
standpoint on these clauses and approves of
its careful
approach. It feels, however, that the report does not demon-
strate, in the light of practical experience, that this review is
necessary. Experience shows that companies often deviate
from these standard clauses — thus confirming their illustrative
character — in attractive contracts, contracts covering major
risks or contracts taken out through certain intermediaries
who have negotiated specific terms for their customers. The
use of indicative standard conditions relates both to the list of
risks covered by the policy and to the precise indication of its

23.2.2000

EN

Official Journal of the European Communities

C 51/107

limits in the form of exclusions or safety precautions to be
taken by the policyholder in order to be eligible for cover. The
use of a list of excluded risks will, furthermore, depend on the
way the policy is drafted. On some markets, policies list risks
covered, while on others they follow the ‘all, except’ pattern.
For these reasons, the Committee would welcome further
information on experience with this type of clause, before
changing the current system of exemption by notification.

3.2.2.1.
The Committee would also refer to its opinions on
unfair terms. Without going back as far as studies or opinions
on the situation before the implementation of Directive
93/13/EC on unfair terms, the Committee would refer to
the work carried out in 1997-1998 by the Single Market
Observatory during preparation of the opinion on ‘Consumers
in the insurance market’. At that time, the Committee

1) pointed out the fundamental principle of the balance to
be struck between the insurer and the policyholder in
contractual relations,

2)

recognised the justification for the exemption system dealt
with by the present report, and

3)

invited the Commission to conduct a more systematic
study of clauses in contracts destined for consumers, in
order to remedy any unfairness.

3.3.

Joint cover of certain types of risk

3.3.1.
In its opinion on the empowering regulation, the
Committee noted the obvious advantage of joint cover of
certain types of risk, especially for major risks.

3.3.2.
The Committee is pleased with the pragmatic
approach taken by the Commission in the complex area of
defining which markets should be taken into consideration in
assessing the lawfulness of the joint cover of certain risks.
The Commission’s recent examination of aviation insurance,
mentioned in point 30 of the report, bears witness to this. It
would be worth the Commission’s while exploring ways of
legal security, within a reasonable
offering operators real
timeframe, regarding whether or not joint cover of certain
types of risk is lawful.

3.4. Safety equipment

The Committee notes that

3.4.1.
the involvement of
insurance companies in the standardisation of safety and
protective equipment tends to increase the reliability of the
equipment available to the consumer. On this score, the
interests of
the public are
indistinguishable.

the companies and those of

The Committee notes the context

in which the
3.4.2.
Commission, on the basis of comments from safety equipment
manufacturers, was led to adopt a critical stance towards the
efforts of insurers to align technical standards regarding fire
prevention and anti-theft equipment in particular. The insurers
do nonetheless deserve recognition for the work they have
done through their representatives in professional and con-
sumer consultation forums and on standards bodies. The
Committee is of the opinion that the slowness of progress in
the European harmonisation of technical standards is owing
to aspects that are often out of insurers’ hands. While it is right
to encourage harmonisation, insurance companies must not
as a result be forced to level downwards, towards the lowest
common denominator, the quality requirements which can
reasonably be expected for safety equipment. Furthermore,
insurers must be free to develop standards rapidly and flexibly
when and where circumstances require.

The Committee invites the Commission to facilitate the free
movement of goods in this sector through the appropriate
channels, largely beyond the context of this report.

3.5. Settlement of claims and registers

3.5.1.
The Committee notes that the interested parties have
declined to extend the scope of the exemption regulation to
registers and the settlement of claims, though these two
categories were mentioned in the empowering regulation. It
would, therefore, suggest that they should not be covered by
the exemption regulation.

4. Conclusion

3.3.3.
The Committee meanwhile would recommend that
the Commission remain flexible regarding the necessary
dimension (see point 28b in the report) for operating on a
market as justification for joining a pool, and also take account
of the opportunity that participation in a pool can offer to
companies seeking technical experience.

The report gives a fair assessment of the operation of the
exemption regulation, bearing witness to pragmatism, concern
to ensure potential operators can enter the market, and
transparency for consumers. The Commission has exercised
its responsibilities with discernment, authorising cooperation
in the technical areas covered by the exemption regulation and
stepping in when cooperation has an excessive influence on
commercial conditions. The Committee notes that the system

C 51/108

EN

Official Journal of the European Communities

23.2.2000

meets a need and, as proved by the diverse insurance terms on
offer, has not led to a loss of competitiveness. The report
should therefore provide encouragement to continue along

the path marked out by the regulation(s) and inspire the
national authorities whose role is certainly set to grow in the
years ahead.

Brussels, 9 December 1999.

The President

of the Economic and Social Committee

Beatrice RANGONI MACHIAVELLI