Commission Regulation (EC) No 358/2003 of 27 February 2003 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector (Text with EEA relevance)
Date: 2003-02-27
Institutions: European Commission
Subjects: application of EU law, competition law, insurance, insurance company, insurance contract, insured risk, inter-company agreement, restrictive trade practice

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COMMISSION REGULATION (EC) No 358/2003

of 27 February 2003

on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and
concerted practices in the insurance sector

(Text with EEA relevance)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EEC) No 1534/91 of 31
May 1991 on the application of Article 85(3) of the Treaty to
certain categories of agreements, decisions and concerted prac-
tices in the insurance sector (1), and in particular Article 1(1)(a),
(b), (c) and (e) thereof,

Having published a draft of this Regulation (2),

Having consulted the Advisory Committee on Restrictive Prac-
tices and Dominant Positions,

Whereas:

(1)

Regulation (EEC) No 1534/91 empowers the Commis-
sion to apply Article 81(3) of the Treaty by regulation to
certain categories of agreements, decisions and concerted
practices in the insurance sector which have as their
object cooperation with respect to:

in the insurance
decisions and concerted practices
sector (3). Regulation (EEC) No 3932/92, as amended by
the Act of Accession of Austria, Finland and Sweden,
expires on 31 March 2003.

(3)

(4)

Regulation (EEC) No 3932/92 does not grant an exemp-
tion to agreements concerning the settlement of claims
and registers of, and information on, aggravated risks.
lacked sufficient
The Commission considered that
experience in handling individual cases to make use of
the power conferred by Council Regulation (EEC) No
1534/91 in those fields. This situation has not changed.

it

On 12 May 1999, the Commission adopted a Report (4)
to the Council and the European Parliament on the
operation of Regulation (EEC) No 3932/92. On 15
December 1999, the Economic and Social Committee
adopted an opinion on the Commission's report (5). On
19 May 2000, the Parliament adopted a Resolution on
the Commission's report (6). On 28 June 2000,
the
Commission held a consultation meeting with interested
parties, including representatives of the insurance sector
and national competition authorities, on the Regulation.
On 9 July 2002, the Commission published in the Offi-
cial Journal a draft of the present Regulation, with an
invitation to interested parties to submit comments not
later than 30 September 2002.

— the establishment of common risk premium tariffs
based on collectively ascertained statistics or the
number of claims,

(5)

— the establishment of common standard policy condi-

tions,

— the common coverage of certain types of risks,

— the settlement of claims,

— the testing and acceptance of security devices,

(6)

— registers of, and information on, aggravated risks.

effective protection of

A new Regulation should meet the two requirements of
competition and
ensuring
providing adequate legal security for undertakings. The
pursuit of these objectives should take account of the
need to simplify administrative supervision to as great
an extent as possible. Account must also be taken of the
Commission's experience in this field since 1992, and
the results of the consultations on the 1999 Report and
consultations
this
Regulation.

leading up to the adoption of

Regulation (EEC) No 1534/91 requires the exempting
regulation of the Commission to define the categories of
agreements, decisions and concerted practices to which
it applies, to specify the restrictions or clauses which
may, or may not, appear in the agreements, decisions
and concerted practices, and to specify the clauses which
must be contained in the agreements, decisions and
concerted practices or the other conditions which must
be satisfied.

(2)

Pursuant to Council Regulation (EEC) No 1534/91, the
Commission adopted Regulation (EEC) No 3932/92 of
21 December 1992 on the application of Article 85(3)
the Treaty to certain categories of agreements,
of

(1) OJ L 143, 7.6.1991, p. 1.
(2) OJ C 163, 9.7.2002, p. 7.

(3) OJ L 398, 31.12.1992, p. 7.
(4) COM(1999) 192 final.
(5) CES 1139/99.
(6) PE A5-0104/00.

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(12)

Nevertheless, it is appropriate to move away from the
approach of
listing exempted clauses and to place
greater emphasis on defining categories of agreements
which are exempted up to a certain level of market
power and on specifying the restrictions or clauses
which are not to be contained in such agreements. This
is consistent with an economics based approach which
assesses the impact of agreements on the relevant
market. However,
it should be recognised that in the
insurance sector there are certain types of collaboration
involving all the undertakings on a relevant insurance
market which can be regarded as normally satisfying the
conditions laid down in Article 81(3) of the Treaty.

For the application of Article 81(3) of the Treaty by
regulation, it is not necessary to define those agreements
which are capable of falling within Article 81(1). In the
individual assessment of agreements under Article 81(1),
account has to be taken of several factors, and in parti-
cular the market structure on the relevant market.

The benefit of the block exemption should be limited to
those agreements for which it can be assumed with suffi-
cient certainty that they satisfy the conditions of Article
81(3) of the Treaty.

(13)

(7)

(8)

(9)

(10)

Collaboration between insurance undertakings or within
associations of undertakings in the calculation of the
average cost of covering a specified risk in the past or,
for life insurance, tables of mortality rates or of the
frequency of illness, accident and invalidity, makes it
possible to improve the knowledge of risks and facili-
tates the rating of risks for individual companies. This
can in turn facilitate market entry and thus benefit
consumers. The same applies to joint studies on the
probable impact of extraneous circumstances that may
influence the frequency or scale of claims, or the yield of
different types of investments. It is, however, necessary
to ensure that such collaboration is only exempted to
the extent to which it is necessary to attain these objec-
tives. It is therefore appropriate to stipulate that agree-
ments on commercial premiums are not exempted;
indeed, commercial premiums may be lower than the
amounts indicated by the results of
the calculations
tables or studies in question, since insurers can use the
revenues from their investments in order to reduce their
premiums. Moreover, the calculations, tables or studies
in question should be non-binding and serve only for
reference purposes.

Furthermore, since access to such calculations, tables
and studies is necessary both for insurance undertakings
active on the geographic or product market in question
and also for those considering entering that market, such
insurance undertakings must be granted access to such
calculations tables and studies on reasonable and non-
discriminatory terms, as compared with insurance under-
takings already present on that market. Such terms
might for example include a commitment from an insur-
ance undertaking not yet present on the market
to
provide statistical information on claims, should it ever
enter the market. They might also include membership
of the association of insurers responsible for producing
the calculations, as long as access to such membership is
itself available on reasonable and non-discriminatory
terms to insurance undertakings not yet active on the
market in question. However, any fee charged for access
to such calculations or related studies to insurance
undertakings which have not contributed to them,
would not be considered reasonable for this purpose if it
were so high as to constitute a barrier to entry on the
market.

The reliability of joint calculations, tables and studies
becomes greater as the amount of statistics on which
they are based is increased. Insurers with high market
shares may generate sufficient statistics internally to be
able to make reliable calculations, but those with small
market shares will not be able to do so, much less new
entrants. The inclusion in such joint calculations, tables
and studies of information from all insurers on a market,
including large ones, promotes competition by helping
smaller insurers, and facilitates market entry. Given this
specificity of the insurance sector, it is not appropriate
to subject any exemption for such joint calculations and
joint studies to market share thresholds.

(14)

Standard policy conditions or standard individual clauses
and standard models illustrating the profits of a life
assurance policy can produce benefits. For example, they
can bring efficiency gains for insurers; they can facilitate
market entry by small or inexperienced insurers; they
can help insurers to meet legal obligations; and they can
be used by consumer organisations as a benchmark to
compare insurance policies offered by different insurers.

(11) Moreover, the broader the categories into which statis-
tics on the cost of covering a specified risk in the past
are grouped, the less leeway insurance undertakings have
to calculate premiums on a narrower basis. It is therefore
appropriate to exempt joint calculations of the past cost
of risks on condition that the available statistics are
provided with as much detail and differentiation as is
actuarially adequate.

(15) However, standard policy conditions must not

lead
either to the standardisation of products or to the crea-
tion of a significant imbalance between the rights and
obligations arising from the contract. Accordingly, the
exemption should only apply to standard policy condi-
tions on condition that
they are not binding, and
expressly mention that participating undertakings are
free to offer different policy conditions to their custo-
mers. Moreover, standard policy conditions may not
contain any systematic exclusion of specific types of

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risk without providing for the express possibility of
including that cover by agreement and may not provide
for the contractual relationship with the policyholder to
be maintained for an excessive period or go beyond the
initial object of the policy. This is without prejudice to
obligations arising from Community or national law to
include certain risks in certain policies.

This Regulation therefore grants an exemption to any
such group which is newly-created in order to cover a
new risk, for the first three years of its existence.

(16)

In addition, it is necessary to stipulate that the common
standard policy conditions must be generally available to
any interested person, and in particular to the policy-
holder, so as to ensure that there is real transparency
and therefore benefit for consumers.

(17)

(18)

(19)

is not

The inclusion in an insurance policy of risks to which a
significant number of policyholders
simulta-
neously exposed may hinder innovation, given that the
bundling of unrelated risks can be a disincentive for
insurers to offer separate and specific insurance cover
for them. A clause which imposes such comprehensive
cover should therefore not be covered by the block
requirement on
exemption. Where there is a legal
insurers to include in policies cover for risks to which a
significant number of policyholders are not simulta-
neously exposed, then the inclusion in an non-binding
model contract of a standard clause reflecting such a
legal requirement does not constitute a restriction of
competition and falls outside the scope of Article 81(1)
of the Treaty.

Co-insurance or co-reinsurance groups
(often called
‘pools’), can allow insurers and reinsurers to provide
insurance or reinsurance for risks for which they might
only offer insufficient cover in the absence of the pool.
They can also help insurance and reinsurance undertak-
ings to acquire experience of risks with which they are
unfamiliar. However, such groups can involve restric-
tions of competition, such as the standardisation of
policy conditions and even of amounts of cover and
premiums. It is therefore appropriate to lay down the
circumstances in which such groups can benefit from
exemption.

For genuinely new risks it is not possible to know in
advance what subscription capacity is necessary to cover
the risk, nor whether two or more such groups could
co-exist for the purposes of providing this type of insur-
ance. A pooling arrangement which is for the co-insur-
ance or co-reinsurance exclusively of such new risks (not
of a mixture of new risks and existing risks) can there-
fore be exempted for a limited period of time. Three
years should constitute an adequate period for
the
constitution of sufficient historical information on claims
to assess the necessity or otherwise of one single pool.

(20)

(21)

(22)

The definition of
‘new risks’ clarifies that only risks
which did not exist before are included in the definition,
thus excluding for example risks which hitherto existed
but were not insured. Moreover, a risk whose nature
changes
considerable
increase in terrorist activity) falls outside the definition,
as the risk itself is not new in that case. A new risk, by
its nature, requires an entirely new insurance product,
and cannot be covered by additions or modifications to
an existing insurance product.

significantly

example

(for

a

For risks which are not new, it is recognised that such
co-insurance and co-reinsurance groups which involve a
restriction of competition can also,
in certain limited
involve benefits such as to justify an
circumstances,
exemption under Article 81(3) of the Treaty, even if they
could be replaced by two or more competing insurance
entities. They may for example, allow their members to
gain the necessary experience of the sector of insurance
involved, they may allow cost savings, or reduction of
premiums through joint reinsurance on advantageous
terms. However, any exemption for such groups is not
justified if the group in question benefits from a signifi-
cant level of market power, since in those circumstances
the restriction of competition deriving from the exis-
tence of the pool would normally outweigh any possible
advantages.

This Regulation therefore grants an exemption to any
such co-insurance or co-reinsurance group which has
existed for more than three years, or which is not
created in order to cover a new risk, on condition that
the insurance products underwritten within the group
by its members do not exceed the following thresholds:
25 % of the relevant market in the case of co-reinsurance
groups, and 20 % in the case of co-insurance groups.
The threshold for co-insurance groups is lower because
the co-insurance pools may involve uniform policy
conditions and commercial premiums. These exemptions
however only apply if the group in question meets the
further conditions laid out in this Regulation, which are
intended to keep to a minimum the restrictions of
competition between the members of the group.

(23)

Pools falling outside the scope of this Regulation may be
eligible for an individual exemption, depending on the
details of the pool itself and the specific conditions of
the market in question. Considering that many insurance
markets are constantly evolving, an individual analysis
would be necessary in such cases in order to determine
whether or not the conditions of Article 81(3) of the
Treaty are met.

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(24)

The adoption by an association or associations of insur-
ance or reinsurance undertakings of technical specifica-
tions,
rules or codes of practice concerning safety
devices, and of procedures for evaluating the compliance
of safety devices with those technical specifications, rules
in providing a
or codes of practice, can be beneficial
benchmark to insurers and reinsurers when assessing the
extent of the risk they are asked to cover in a specific
case, which depends on the quality of security equip-
ment and of its installation and maintenance. However,
where there exist Community-level technical specifica-
tions, classification systems, rules, procedures or codes
of practice harmonised in line with Community legisla-
tion covering the free movement of goods,
it is not
appropriate to exempt by regulation any agreements
among insurers on the same subject, since the objective
of such harmonisation at European level is to lay down
exhaustive and adequate levels of security for security
devices which apply uniformly across the Community.
Any agreement among insurers on different require-
ments for safety devices could undermine the achieve-
ment of that objective.

(25) As concerns the installation and maintenance of security
devices, in so far as no such Community-level harmoni-
sation exists, agreements between insurers laying down
technical specifications or approval procedures that are
used in one or several Member States can be exempted
by regulation; however,
exemption should be
subjected to certain conditions, in particular that each
insurance undertaking must remain free to accept for
insurance, on whatever terms and conditions it wishes,
devices and installation and maintenance undertakings
not approved jointly.

the

(26)

If individual agreements exempted by this Regulation
nevertheless have effects which are incompatible with
Article 81(3) of the Treaty, as interpreted by the admin-
istrative practice of the Commission and the case-law of
the Court of Justice, the Commission may withdraw the
benefit of the block exemption. This may occur in parti-
cular where studies on the impact of future develop-
ments are based on unjustifiable hypotheses; or where
recommended standard policy conditions contain clauses
which create, to the detriment of the policyholder, a
significant imbalance between the rights and obligations
arising from the contract; or where groups are used or
managed in such a way as to give one or more partici-
pating undertakings the means of acquiring or reinfor-
cing a position of significant market power on the rele-
vant market, or if these groups result in market sharing.

(27)

In order to facilitate the conclusion of agreements, some
of which can involve significant investment decisions,
the period of validity of this Regulation should be fixed
at seven years.

(28)

This Regulation is without prejudice to the application
of Article 82 of the Treaty.

(29)

the primacy of
In accordance with the principle of
Community law, no measure taken pursuant to national
laws on competition should prejudice the uniform appli-
cation throughout the common market of the Commu-
nity competition rules or the full effect of any measures
adopted in implementation of those rules, including this
Regulation,

HAS ADOPTED THIS REGULATION:

CHAPTER I

EXEMPTION AND DEFINITIONS

Article 1

Exemption

Pursuant to Article 81(3) of the Treaty and subject to the provi-
sions of this Regulation, it is hereby declared that Article 81(1)
of
the Treaty shall not apply to agreements entered into
between two or more undertakings in the insurance sector
(hereinafter referred to as ‘the parties’) with respect to:

(a) the joint establishment and distribution of:

— calculations of the average cost of covering a specified

risk in the past (hereinafter ‘calculations’);

— in connection with insurance involving an element of
capitalisation, mortality tables, and tables showing the
frequency of illness, accident and invalidity (hereinafter
‘tables’);

(b) the joint carrying-out of studies on the probable impact of
general circumstances external to the interested undertak-
ings, either on the frequency or scale of future claims for a
given risk or
risk category or on the profitability of
different types of investment (hereinafter ‘studies’), and the
distribution of the results of such studies;

(c) the joint establishment and distribution of non-binding
standard policy conditions for direct insurance (hereinafter
‘standard policy conditions’);

(d) the joint establishment and distribution of non-binding
models illustrating the profits to be realised from an insur-
ance policy involving an element of capitalisation (herein-
after ‘models’);

(e) the setting-up and operation of groups of insurance under-
takings or of
insurance undertakings and reinsurance
undertakings for the common coverage of a specific cate-
gory of risks in the form of co-insurance or co-reinsurance;
and

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(f) the establishment, recognition and distribution of:

— technical

specifications,

rules or codes of practice
concerning those types of security devices for which
there do not exist at Community level technical specifi-
rules, procedures or
cations, classification systems,
codes of practice harmonised in line with Community
legislation covering the free movement of goods, and
procedures for assessing and approving the compliance
of security devices with such specifications, rules or
codes of practice,

— technical specifications, rules or codes of practice for
the installation and maintenance of security devices,
and procedures for assessing and approving the compli-
ance of undertakings which install or maintain security
devices with such specifications, rules or codes of prac-
tice.

Article 2

Definitions

For the purposes of the present Regulation, the following defi-
nitions shall apply:

1.

‘Agreement’ means an agreement, a decision of an associa-
tion of undertakings or a concerted practice;

2.

‘Participating undertakings’ means undertakings party to the
agreement and their respective connected undertakings;

3.

‘Connected undertakings’ means:

(a) undertakings in which a party to the agreement, directly

or indirectly:

(i) has the power to exercise more than half the voting

rights, or

(ii) has the power to appoint more than half

the
supervisory board, board of
legally representing the

the

members of
management or bodies
undertaking, or

(iii) has the right to manage the undertaking's affairs;

(b) undertakings which directly or indirectly have, over a
party to the agreement, the rights or powers listed in (a);

(c) undertakings in which an undertaking referred to in (b)
has, directly or indirectly, the rights or powers listed in
(a);

(d) undertakings in which a party to the agreement together
with one or more of the undertakings referred to in (a),
(b) or (c), or in which two or more of the latter under-
takings, jointly have the rights or powers listed in (a);

(e) undertakings in which the rights or the powers listed in

(a) are jointly held by:

(i) parties

agreement or
connected undertakings referred to in (a) to (d), or

to the

their

respective

(ii) one or more of the parties to the agreement or one
or more of their connected undertakings referred to
in (a) to (d) and one or more third parties.

4.

‘Standard policy conditions’ refers to any clauses contained
in model or reference insurance policies prepared jointly by
insurers or by bodies or associations of insurers;

5.

‘Co-insurance groups’ means groups set up by insurance
undertakings which:

(i) agree to underwrite in the name and for the account of
all the participants the insurance of a specified risk cate-
gory; or

(ii) entrust the underwriting and management of the insur-
ance of a specified risk category in their name and on
their behalf to one of the insurance undertakings, to a
common broker or to a common body set up for this
purpose;

6.

‘Co-reinsurance groups’ means groups set up by insurance
undertakings, possibly with the assistance of one or more
re-insurance undertakings:

(i) in order to reinsure mutually all or part of their liabil-

ities in respect of a specified risk category;

(ii) incidentally, to accept in the name and on behalf of all
the participants the re-insurance of the same category of
risks;

7.

‘New risks’ means risks which did not exist before, and for
which insurance cover requires the development of an
entirely new insurance product, not involving an extension,
replacement of an existing insurance
improvement or
product.

8.

‘Security devices’ means
and equipment
designed for loss prevention and reduction, and systems
formed from such elements.

components

9.

‘Commercial premium’ means the price which is charged to
the purchaser of an insurance policy.

CHAPTER II

JOINT CALCULATIONS, TABLES, AND STUDIES

Article 3

Conditions for exemption

The exemption provided for in Article 1(a) shall apply on

1.
condition that the calculations or tables:

(a) are based on the assembly of data, spread over a number of
risk-years chosen as an observation period, which relate to
identical or comparable risks in sufficient number to consti-
tute a base which can be handled statistically and which
will yield figures on (inter alia):

— the number of claims during the said period,

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— the number of individual risks insured in each risk-year

(c) are accessible to any interested person and provided simply

of the chosen observation period,

upon request.

— the total amounts paid or payable in respect of claims

arisen during the said period,

— the total amount of capital insured for each risk-year

during the chosen observation period;

(b) include as detailed a breakdown of the available statistics as

is actuarially adequate;

(c) do not include in any way elements for contingencies,
income deriving from reserves, administrative or commer-
cial costs or fiscal or para-fiscal contributions, and take into
account neither revenues from investments nor anticipated
profits.

The exemptions provided for in both Article 1(a) and
the calculations,

2.
Article 1(b) shall apply on condition that
tables or study results:

The exemption provided for in Article 1(d) shall apply on
the non-binding models are established and

2.
condition that
distributed only by way of guidance.

Article 6

Agreements not covered by the exemption

The exemption provided for in Article 1(c) shall not apply

1.
where the standard policy conditions contain clauses which:

(a) contain any indication of

the

level of

commercial

(a) do not identify the insurance undertakings concerned or

premiums;

any insured party;

(b) when compiled and distributed,

include a statement that

they are non-binding;

(c) are made available on reasonable and non-discriminatory
terms, to any insurance undertaking which requests a copy
of them, including insurance undertakings which are not
active on the geographical or product market to which
those calculations, tables or study results refer.

Article 4

Agreements not covered by the exemption

The exemption provided for in Article 1 shall not apply where
participating undertakings
into an undertaking or
enter
commitment among themselves, or oblige other undertakings,
not to use calculations or tables that differ from those estab-
lished pursuant to Article 1(a), or not to depart from the results
of the studies referred to in Article 1(b).

CHAPTER III

STANDARD POLICY CONDITIONS AND MODELS

Article 5

Conditions for exemption

The exemption provided for in Article 1(c) shall apply on

1.
condition that the standard policy conditions:

(b) indicate the amount of the cover or the part which the

policyholder must pay himself (the ‘excess’);

(c) impose comprehensive cover including risks to which a
significant number of policyholders are not simultaneously
exposed;

(d) allow the insurer to maintain the policy in the event that
he cancels part of the cover, increases the premium without
the risk or the scope of the cover being changed (without
prejudice to indexation clauses), or otherwise alters the
policy conditions without the express consent of the policy-
holder;

(e) allow the insurer to modify the term of the policy without

the express consent of the policyholder;

(f) impose on the policyholder in the non-life assurance sector

a contract period of more than three years;

(g) impose a renewal period of more than one year where the
policy is automatically renewed unless notice is given upon
the expiry of a given period;

(h) require the policyholder to agree to the reinstatement of a
policy which has been suspended on account of the disap-
pearance of the insured risk, if he is once again exposed to
a risk of the same nature;

(i) require the policyholder to obtain cover from the same

insurer for different risks;

(j) require the policyholder,

in the event of disposal of the
object of insurance, to make the acquirer take over the
insurance policy;

(a) are established and distributed with an explicit statement
that they are non-binding and that their use is not in any
way recommended;

(b) expressly mention that participating undertakings are free
to offer different policy conditions to their customers; and

(k) exclude or limit the cover of a risk if the policyholder uses
security devices, or installing or maintenance undertakings,
which are not approved in accordance with the relevant
specifications agreed by an association or associations of
insurers in one or several other Member States or at the
European level.

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The exemption provided for in Article 1(c) shall not
2.
benefit undertakings or associations of undertakings which
agree, or agree to oblige other undertakings, not to apply
conditions other than standard policy conditions established
pursuant to an agreement between the participating undertak-
ings.

3. Without prejudice to the establishment of specific insur-
ance conditions for particular social or occupational categories
of the population, the exemption provided for in Article 1(c)
shall not apply to agreements decisions and concerted practices
which exclude the coverage of certain risk categories because
of the characteristics associated with the policyholder.

4.
The exemption provided for in Article 1(d) shall not
apply where, without prejudice to legally imposed obligations,
the non-binding models include only specified interest rates or
contain figures indicating administrative costs;

5.
The exemption provided for in Article 1(d) shall not
benefit undertakings or associations of undertakings which
concert or undertake among themselves, or oblige other under-
takings, not to apply models illustrating the benefits of an
insurance policy other than those established pursuant to an
agreement between the participating undertakings.

CHAPTER IV

For the purposes of applying the market share threshold
3.
provided for in the second paragraph the following rules shall
apply:

(a) the market share shall be calculated on the basis of the
gross premium income; if gross premium income data are
not available, estimates based on other reliable market
information, including insurance cover provided or insured
risk value, may be used to establish the market share of the
undertaking concerned;

(b) the market share shall be calculated on the basis of data

relating to the preceding calendar year;

(c) the market share held by the undertakings referred to in
Article 2(3)(e) shall be apportioned equally to each under-
taking having the rights or the powers listed in Article
2(3)(a).

4.
If the market share referred to in point (a) of the second
paragraph is initially not more than 20 % but subsequently
rises above this level without exceeding 22 %, the exemption
provided for in Article 1(e) shall continue to apply for a period
of two consecutive calendar years following the year in which
the 20 % threshold was first exceeded.

5.
If the market share referred to in point (a) of the second
paragraph is initially not more than 20 % but subsequently
rises above 22 %, the exemption provided for in Article 1(e)
shall continue to apply for one calendar year following the year
in which the level of 22 % was first exceeded.

COMMON COVERAGE OF CERTAIN TYPES OF RISKS

The benefit of paragraphs 4 and 5 may not be combined

6.
so as to exceed a period of two calendar years.

Article 7

Application of exemption and market share thresholds

If the market share referred to in point (b) of the second
7.
paragraph is initially not more than 25 % but subsequently
rises above this level without exceeding 27 %, the exemption
provided for in Article 1(e) shall continue to apply for a period
of two consecutive calendar years following the year in which
the 25 % threshold was first exceeded.

1.
As concerns co-insurance or co-reinsurance groups which
are created after the date of entry into force of the present
Regulation in order exclusively to cover new risks, the exemp-
tion provided for in Article 1(e) shall apply for a period of
three years from the date of the first establishment of the
group, regardless of the market share of the group.

8.
If the market share referred to in point (b) of the second
paragraph is initially not more than 25 % but subsequently
rises above 27 %, the exemption provided for in Article 1(e)
shall continue to apply for one calendar year following the year
in which the level of 27 % was first exceeded.

2.
As concerns co-insurance or co-reinsurance groups which
do not fall within the scope of the first paragraph (for the
reason that they have been in existence for over three years or
have not been created in order to cover a new risk), the exemp-
tion provided for in Article 1(e) shall apply as long as the
present Regulation remains in force, on condition that the
insurance products underwritten within the grouping arrange-
ment by the participating undertakings or on their behalf do
not, in any of the markets concerned, represent:

(a) in the case of co-insurance groups, more than 20 % of the

relevant market;

(b) in the case of co-reinsurance groups, more than 25 % of

the relevant market.

The benefit of paragraphs 7 and 8 may not be combined

9.
so as to exceed a period of two calendar years.

Article 8

Conditions for exemption

The exemption provided for in Article 1(e) shall apply on
condition that:

(a) each participating undertaking has the right to withdraw
from the group, subject to a period of notice of not more
than one year, without incurring any sanctions;

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(b) the rules of the group do not oblige any member of the
group to insure or re-insure through the group, in whole
or in part, any risk of the type covered by the group;

(g) the evaluation of conformity does not impose on the appli-
cant any expenses that are disproportionate to the costs of
the approval procedure;

(c) the rules of the group do not restrict the activity of the
group or its members to the insurance or reinsurance of
risks located in any particular geographical part of the
European Union;

(d) the agreement does not limit output or sales;

(h) the devices and installation undertakings and maintenance
undertakings that meet the assessment criteria are certified
to this effect
in a non-discriminatory manner within a
period of six months of the date of application, except
where technical considerations justify a reasonable addi-
tional period;

(e) the agreement does not allocate markets or customers;

(i) the fact of compliance or approval is certified in writing;

(f) the members of a co-reinsurance group do not agree on
the commercial premiums which they charge in direct
insurance; and

(g) no member of the group, or undertaking which exercises a
the
determining influence on the commercial policy of
group,
is also a member of, or exercises a determining
influence on the commercial policy of, a different group
active on the same relevant market.

(j) the grounds for a refusal to issue the certificate of compli-
ance are given in writing by attaching a duplicate copy of
the records of the tests and controls that have been carried
out;

(k) the grounds for a refusal to take into account a request for

assessment are provided in writing; and

(l) the specifications and rules are applied by bodies accredited
to norms in the series EN 45 000 and EN ISO/IEC 17025.

CHAPTER V

SECURITY DEVICES

Article 9

Conditions for exemption

The exemption provided for in Article 1(f) shall apply on
condition that:

(a) the technical

specifications and compliance assessment
procedures are precise, technically justified and in propor-
tion to the performance to be attained by the security
device concerned;

(b) the rules for the evaluation of installation undertakings and
maintenance undertakings are objective, relate to their tech-
nical competence and are applied in a non-discriminatory
manner;

(c) such specifications and rules are established and distributed
with an accompanying statement that insurance undertak-
ings are free to accept for insurance, on whatever terms
and conditions they wish, other security devices or installa-
tion and maintenance undertakings which do not comply
with these technical specifications or rules;

(d) such specifications and rules are provided simply upon

request to any interested person;

(e) any lists of security devices and installation and mainte-
nance undertakings compliant with specifications include a
classification based on the level of performance obtained;

(f) a request for an assessment may be submitted at any time

by any applicant;

CHAPTER VI

MISCELLANEOUS PROVISIONS

Article 10

Withdrawal

The Commission may withdraw the benefit of this Regulation,
pursuant to Article 7 of Council Regulation (EEC) No 1534/91,
where either on its own initiative or at the request of a Member
State or of a natural or legal person claiming a legitimate
interest, it finds in a particular case that an agreement to which
the exemption provided for in Article 1 applies nevertheless
has effects which are incompatible with the conditions laid
down in Article 81(3) of the Treaty, and in particular where,

(a) studies to which the exemption in Article 1(b) applies are

based on unjustifiable hypotheses;

(b) standard policy conditions to which the exemption in
Article 1(c) applies contain clauses which create, to the
imbalance
detriment of
between the rights and obligations arising from the
contract;

the policyholder, a significant

(c) in relation to the common coverage of certain types of risks
to which the exemption in Article 1(e) applies, the setting-
up or operation of a group results, through the conditions
governing admission,
the risks to be
covered, the agreements on retrocession or by any other
in the sharing of the markets for the insurance
means,
products concerned or for neighbouring products.

the definition of

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Article 11

Transitional period

The prohibition laid down in Article 81(1) of the Treaty shall not apply during the period from 1 April
2003 to 31 March 2004 in respect of agreements already in force on 31 March 2003 which do not satisfy
the conditions for exemption provided for in this Regulation but which satisfy the conditions for exemp-
tion provided for in Regulation (EEC) No 3932/92.

This Regulation shall enter into force on 1 April 2003. It shall expire on 31 March 2010.

Article 12

Period of validity

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 27 February 2003.

For the Commission

Mario MONTI

Member of the Commission