REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL On the functioning of Commission Regulation (EU) No 267/2010 on the application of Article 101(3) of the Treaty on the functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector
Date: 2016-03-17
Institutions: Directorate-General for Competition, European Commission
Subjects: control of restrictive practices, exchange of information, insurance company, inter-company agreement, reinsurance, restriction on competition, restrictive trade practice

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 17.3.2016  COM(2016) 153 final   REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL On the functioning of Commission Regulation (EU) No 267/2010 on the application of Article 101(3) of the Treaty on the functioning of the European Union  to certain categories of agreements, decisions and concerted practices in the insurance sector {SWD(2016) 62 final} {SWD(2016) 63 final}  
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

On the functioning of Commission Regulation (EU) No 267/2010 on the application of 
Article 101(3) of the Treaty on the functioning of the European Union  to certain 
categories of agreements, decisions and concerted practices in the insurance sector 

1. 

INTRODUCTION 

1.  Pursuant  to  Article  101(3)  of  the  Treaty  on  the  Functioning  of  the  European  Union 
(TFEU),  agreements  between  undertakings  that  restrict  competition  within  the 
meaning of Article 101(1) TFEU may be declared compatible with the internal market 
if  they  contribute  to  promoting  technical  or  economic  progress  or  to  improving  the 
production  or  distribution  of  goods  while  allowing  consumers  a  fair  share  of  the 
resulting benefit, provided that the restrictions are limited to what is strictly necessary 
(principle of proportionality) and that they do not eliminate competition in respect of a 
substantial part of the relevant product market. 

2.  By  Regulation  (EEC)  No  1534/911  (the  Empowering  Regulation),  the  Council 
empowered the Commission to adopt regulations on the application of Article 101(3) 
TFEU  to  certain  types of  agreement  between  undertakings,  decisions  of  associations 
of undertakings and concerted practices in the insurance sector. On 24 March 2010, on 
the  basis  of  the  Empowering  Regulation,  the  Commission  adopted  Regulation  (EU) 
No  267/20102  (the  Insurance  Block  Exemption  Regulation  (IBER))  exempting  two 
categories of agreement in the insurance sector. 

3.  Subject  to  certain  conditions,  the  IBER  exempts  agreements  between  (re)insurers  to 
exchange  information  in  the  form  of  joint  compilations,  tables  and  studies,  and  the 
common coverage of certain types of risk by means of ‘co-(re)insurance pools’. The 
current IBER entered into force on 1 April 2010 and will expire on 31 March 2017. It 
aims  to  ensure  effective  protection  of  competition  while  providing  benefits  to 
consumers and adequate legal security for undertakings. 

4.  Pursuant to Article 8 of the Empowering Regulation, the Commission must submit a 
report on the functioning and future prospects of the IBER no later than six years after 
its entry into force. 

5.  The  insurance  sector  is  one  of  three  sectors  (the  other  two  being  maritime  liner 
shipping  and  motor  vehicle  distribution)  that  still  benefit  from  a  block  exemption 
regulation (BER). There have been other sectors (such as maritime and air transport) 
for  which  the  relevant  BER  was  not  renewed.  The  first  insurance  block  exemption 
regulation  was  adopted  in  1992  and  renewed  twice,  with  amendments,  in  2003  and 
2010.  In  particular,  in  2010  the  Commission  reduced  the  number  of  categories  of 

1   OJ L 143, 7.6.1991, p.1. 
2   OJ L 83, 30.3.2010, p. 1. 

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exempted  agreements  from  four  to  the  current  two  and  adopted  a  Communication 
providing guidance on the application of the IBER (the IBER Communication).3  

6.  The  Commission  is  carrying  out  a  full  impact  assessment  of  possible  policy  options 
before  the  current  IBER  lapses:  non-renewal,  partial  renewal  (one  exemption  only 
and/or renewal with amendments) and renewal.4 

7.  A formal review of the use and functioning of the IBER started in February 2014, with 
the  national  competition  authorities  (NCAs)5  being  consulted  by  means  of  a 
questionnaire, followed in May 2014 by the publication of a roadmap. A meeting with 
the NCAs took place in June 2014. A public consultation was carried out from August 
to  November  2014  and  in  December  2014  complementary  targeted  questionnaires 
were  sent  to  pools,  customers,  intermediaries’  federations/brokers  and  mutual 
insurance  associations.  From  November  2014,  bilateral  meetings  and  telephone 
conferences  were  held  with  specific  stakeholders,  notably  national  insurance 
associations and pools. 

8.  The purpose of this Report is to  present the Commission’s preliminary  views on the 
functioning  and  future  prospects  of  the  IBER  at  this  stage.  In  no  way  does  this 
prejudge  the  Commission’s  final  decision  following  completion  of  the  impact 
assessment. The report is one step in a comprehensive consultation process to which 
all  stakeholders  are  invited  to  contribute.  It  should  be  read  in  conjunction  with  the 
accompanying Commission staff working document,which sets out in more detail the 
Commission staff views on the points made here. 

9.  The  review  will  continue  until  early  2017  and  the  conclusion  of  the  impact 
assessment.  The  Commission  has  commissioned  two  studies  on  issues  pertaining  to 
the  functioning  of  the  IBER  that  stakeholders  have  raised  in  the  context  of  the 
consultation:  supply-side  substitutability  in  insurance  and  the  effects  of  the  different 
forms of co-(re)insurance available on the market.6 These studies will contribute to the 
comprehensive  overview  of  the  market  on  the  basis  of  which  the  Commission  will 
make its final proposals on the future of the IBER. 

2. 

MAIN FINDINGS AND ASSESSMENT 

10. In order to assess the functioning of the IBER and later determine whether it should be 
renewed and, if so, to what extent, the Commission sought to address two  basic and 
related questions: 

3   Commission Communication on the application of Article 101(3) of the Treaty on the Functioning of the 
European  Union  to  certain  categories  of agreements, decisions and  concerted  practices  in  the  insurance 
sector (OJ C 82, 30.3.2010, p. 2). 

4   Details of this process are set out in the relevant impact assessment inception form:   

http://ec.europa.eu/smart-regulation/roadmaps/docs/2016_comp_001_review_iber_en.pdf. 

5  
6  

The NCAs of the 28 EU Member States and the EFTA Surveillance Authority. 

http://ec.europa.eu/competition/calls/tenders_open.html. 

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Question 1: Is the insurance sector still characterised by distinct features that present 
a  heightened  need  for  cooperation  in  the  fields  in  which  the  remaining  IBER 
exemptions apply? 

Question 2: If so, is an exceptional instrument such as a BER still needed in order to 
protect that enhanced need for cooperation? 

11. The  public  consultation  in  2014,  and  the  subsequent  evidence-gathering,  were 
structured  and  carried  out  so  as  to  answer  these  two  questions  and  to  support  the 
upcoming impact assessment of policy options for the future of the IBER. 

12. In  May  2015,  the  European  Commission  adopted  a  new  Better  Regulation  approach 
aimed at more systematic and transparent consulting of stakeholders, improved impact 
assessments and drawing lessons learned from past experience. Given that the work on 
the IBER review started already in early 2014, the process did not follow all the steps 
set  out  in  the  new  Better  Regulation  Guidelines.  However,  the  Review  has  been 
conducted  in  an  open,  transparent  manner  and  key  elements  of  retrospective 
evaluation  have  been  respected.  Thus,  the  analysis  of  the  enhanced  need  for 
cooperation has allowed the Commission to look at the relevance, while the analysis 
of  the  need  for  a  BER  has  taken  into  account  the  coherence,  efficiency  and 
effectiveness of such an approach.   

13. The main findings at this stage in the review process and their assessment are set out 

below: 

(a) 

Enhanced need for cooperation 

Information exchange: compilations, tables and studies 

14. Subject  to  certain  conditions,  Article  2(a)  of  the  IBER  exempts  agreements  between 
undertakings  in  the  insurance  sector  which  relate  to  ‘the  joint  compilation  and 
distribution of information necessary for the following purposes: (i) the calculation of 
the  average  cost  of  covering  a  specified  risk  in  the  past  (hereinafter  compilations); 
and (ii) construction of mortality tables, and tables showing the frequency of illness, 
accident  and  invalidity  in  connection  with  insurance  involving  an  element  of 
capitalisation’.  Article  2(b)  exempts,  also  subject  to  certain  conditions,  ‘the  joint 
carrying  out  of  studies  on  the  probable  impact  of  general  circumstances  external  to 
the  interested  undertakings,  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 and 
the distribution of the results of such studies’. 

15. In order to price risks, insurers generally seek to reduce the disparity between the real 
value of claims, on the one hand, and the premiums paid by the insured, on the other. 
Insurance is a product that covers future risks, the cost of which is unknown when the 
insurance  contract  is  concluded.  Consequently,  the  availability  of  adequate  and 
accurate  past  statistical  information  on  the  actual  cost  of  risk  classes  is  crucial  to 
operations in various segments of the insurance business. Moreover, it appears that no 

4 

 
 
one  insurer  is  in  possession  of  sufficient  statistical  risk  data  to  carry  out  such 
calculations accurately. 

16. By  exchanging  information  in  the  form  of  joint  compilations,  tables  and  studies, 
insurers are able to collate more reliable statistics and develop a better understanding 
of the insured risks. This understanding allows them to rate risks more reliably and, as 
a  result,  to  reduce  mark-ups  and  ultimately  the  prices  paid  by  consumers.  The 
exchange  of  past  statistical  data  is  thus  conducive  to  the  efficient  functioning  of  the 
insurance  sector.  Furthermore,  by  undertaking  such  studies  jointly,  insurers  become 
more aware of the likely future development of the risks in question. This reasoning 
cannot be applied to  the  joint  carrying  out  of studies  on the profitability of different 
types  of  investment.  Firstly  this  category  is  not  covered  by  the  1991  Empowering 
Regulation. In addition, the profitability of investments is unrelated to the knowledge 
of  an  insured  risk  or  to  the  formulation  of  risks  premiums.  In  fact,  the  analysis  of 
alternative investment decisions is not exclusive to the insurance sector but common 
to all undertakings regardless of sector.  

17. The  Solvency  II  Directive  on  insurance  and  reinsurance7,  which  came  into  effect  on 
1 January  2016,  sets  out  stricter  risk-capital  requirements  and  obliges  (re)insurers  to 
calculate  ‘best-estimate’  liabilities,  thus  potentially  heightening  the  need  for  insurers 
to  maintain  more  precise  and  accurate  information  on  risks  in  order  to  calculate 
sufficient reserves in their balance sheets. 

Common coverage of certain types of risk (pools) 

18. Article 5 of the IBER exempts agreements for the setting-up and operation of pools of 
insurance  undertakings  (co-insurance  pools)  or  of  insurance  undertakings  and 
reinsurance  undertakings  (co-reinsurance  pools)  for  the  common  coverage  of  risks, 
subject  to  certain  conditions,  in  particular  that  they  do  not  exceed  a  certain  market 
share  (20 %  for  the  former  and  25  %  for  the  latter).  In  addition,  Article  6  exempts 
co-(re)insurance  pools  covering  new  risks  for  three  years  from  the  date  of  first 
establishment. 

19. At this stage, evidence gathered during the review indicates that insurers often need to 
cooperate in order to cover certain large unconventional risks relating, in particular, to 
terrorism, nuclear power production and environmental protection, where the size and 
spread  of  risks  render  them  more  difficult  or  impossible  to  insure  individually,  as 
opposed to smaller and more conventional risk classes, such as motor vehicle and life 
insurance, where insurers usually underwrite risks independently. Where the nature of 
the  risk 
the  necessary  capacity, 
co-(re)insurance allows insurers to cover a sufficient number of risks so that the risk 
profile of the portfolio corresponds to the totality of the relevant risk category. 

insurer  can  provide 

that  no  one 

is  such 

20. Indications to date are that, over the last decade, the insurance market has developed 
more competitive ways of co-(re)insuring risks, such as broker-led co-(re)insurance or 
line-slips. These are viable alternatives to the institutionalised co-(re)insurance pools 

7 

Directive  2009/138/EC  of  the  European  Parliament  and  of  the  Council  of  25  November  2009  on  the 
taking-up and pursuit of the business of Insurance and Reinsurance (OJ L 335, 17.12.2009, p. 1). 

5 

 
 
                                                            
exempted  by  the  IBER.  In  addition,  insurance  is  not  the  only  sector  in  which 
undertakings tend to cooperate on specific large projects to spread the costs and risks 
involved (this also applies, for example, to large construction projects). 

21. However, in sum this finding may not entirely negate the existence of a more general 
enhanced need to cooperate in order to cover large unconventional risk categories in 
the insurance sector. 

Conclusion 

22. Accordingly, the Commission’s view at this stage is that the two forms of cooperation 
covered by the IBER appear to be specific to the insurance sector, with the excepction 
of studies on the profitability of their different types of investment. Therefore, whether 
there  are  objective  reasons  to  keep  the  rules  set  out  in  Chapter  II  or  III  of  IBER  in 
place  depends  in  the  end  on  whether  either  categories  of  agreements,  decisions  and 
concerted practices addressed in those Chapters need to be protected by an exceptional 
legal instrument such as a BER or whether appropriate guidance would suffice. 

(b) 

Necessity of a BER 

Information exchange: compilations, tables and studies 

23. In  the  public  consultation,  in  order  to  carefully  gauge  the  effects  of  the  potential 
non-renewal  of  the  IBER  exemption,  the  Commission  invited  stakeholders  to  give  a 
detailed  account  of  potential  concrete  changes  to  their  business  conduct  and  to 
quantify,  or  at  least  rank,  the  additional  costs  they  would  incur  as  a  result  and  the 
ultimate  impact  on  premiums.  However,  the  vast  majority  of  stakeholders  failed  to 
quantify  the  anticipated  impact  of  non-renewal,  limiting  themselves  to  general 
observations about the potential effects of less cooperation. 

24. Those  stakeholders  (namely  insurance  companies  and  associations  of  insurers)  who 
took a view on the future of the exemption for joint compilations, tables and studies 
were in favour of maintaining it, but provided only general arguments to support this 
view.  For  instance,  a  number  of  them  claimed  that  non-renewal  would  create  legal 
uncertainty  as  to  the  admissibility  of  cooperation  and  that  the  Commission’s  current 
Horizontal  Guidelines8  do  not  provide  appropriate  guidance  for  self-assessment 
(because they do not take sufficient account of the distinguishing characteristics of the 
insurance sector). 

25. According to the respondents, this perceived lack of legal certainty would have several 
negative effects, including higher compliance costs and, potentially, less cooperation. 
These stakeholders also suggest that bigger incumbents who may not need additional 
statistical  data  to  rate  risks  accurately  could  be  discouraged  from  sharing  this 
information  with  smaller  insurers  and  potential  new  entrants,  who  face  greater 
difficulties  in  estimating  risks  due  to  their  limited  or  non-existent  market  presence. 
This  could  diminish  competition  and  harm  consumers’  interests.  In  their  view,  the 

8   Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to 
horizontal cooperation agreements; Commission Communication 2011/C 11/01 (OJ C 11, 14.1.2011, p. 1). 

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IBER requirement that anonymised and aggregated statistical information on risks be 
made available on reasonable, affordable and non-discriminatory terms ensures a level 
playing-field between smaller and bigger insurers, and facilitates market entry. 

26. These stakeholders also claim that, if less risk information were available, this could 
reduce  confidence  in  insurers’  compulsory  ‘best-estimate’  calculations  of  their 
liabilities and lead to more provisions to build up sufficient reserves for uncertainties 
and contingent liabilities. 

27. However, the Commission finds that appropriate guidance exists to ensure the benefits 

of information exchange. 

28. The  Commission’s  Horizontal  Guidelines,  adopted  after  the  entry  into  force  of  the 
IBER,  have  a  specific  chapter  on  information  exchange  agreements.  This  sets  out 
principles that are fully applicable to the insurance sector and provide a good basis for 
carrying out a self-assessment of the admissibility of the joint creation and distribution 
of compilations, tables and studies. 

29. The  Guidelines  explicitly  recognise  that  ‘[e]xchanges  of  genuinely  aggregated  data, 
where  the  recognition  of  individualised  company-level  information  is  sufficiently 
difficult,  are  much  less  likely  to  lead  to  restrictive  effects  on  competition  than 
exchanges  of  company  level  data’.9  Furthermore,  ‘[c]ollection  and  publication  of 
aggregated  market  data  (such  as  sales  data,  data  on  capacities  or  data  on  costs  of 
inputs  and  components)  by  a  trade  organisation  or  market  intelligence  firm  may 
benefit suppliers and customers alike by allowing them to get a clearer picture of the 
economic situation of a sector. Such data collection and publication may allow market 
participants  to  make  better-informed  individual  choices  in  order  to  adapt  efficiently 
their strategy to the market conditions. More generally, unless it takes place in a tight 
oligopoly, the exchange of aggregated data is unlikely to give rise to restrictive effects 
on competition’.10  

30. In  addition, the Guidelines  acknowledge that  ‘[e]xchange of consumer  data  between 
companies  in  markets  with  asymmetric  information  about  consumers  can  also  give 
rise to efficiencies. For instance, keeping track of the past behaviour of customers in 
terms of accidents or credit default provides an incentive for consumers to limit their 
risk exposure. It also makes it possible to detect which consumers carry a lower risk 
and should benefit from lower prices. In this context, information exchange can also 
reduce  consumer  lock-in,  thereby  inducing  stronger  competition.  This  is  because 
information  is  generally  specific  to  a  relationship  and  consumers  would  otherwise 
lose the benefit from that information when switching to another company. Examples 
of  such  efficiencies  are  found  in  the  banking  and  insurance  sectors,  which  are 
characterised by frequent exchanges of information about consumer defaults and risk 
characteristics’.11  

9  
Paragraph 89. 
10   Paragraph 89. 
11   Paragraph 97. 

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31. The  Guidelines  protect  the  existence  of  this  type  of  cooperation  in  the  insurance 
sector.  The  principles  mirror  those  in  the  IBER  and  exempt  the  exchange  of 
information  between  insurers.  Therefore,  were  the  IBER  to  be  discontinued,  there 
would  already  be  equivalent  Commission  guidance  in  place  to  help  insurers  to 
self-assess  the  admissibility  of  their  cooperation.  For  the  same  reason,  a  compliance 
assessment  by  national  insurance  federations,  which  are  at  present  the  main 
intermediaries  for  compiling  and  disseminating  risk  data,  should  not  bring  about  a 
significant change in compliance costs under the Horizontal Guidelines. The relevant 
federations  and  intermediaries  are  obliged,  in  the  framework  of  the  IBER  and 
Regulation 1/200312, to ensure that the collection and dissemination of risk data in the 
form of compilations, tables and studies comply with these substantive provisions. 

32. Also, in terms of incentives, the alleged risk of less cooperation on joint compilations, 
tables  and  studies  if  the  relevant  Chapter  of  the  IBER  is  not  renewed  appears  to  be 
very  low.  If  cooperation  in  this  area  is  as  indispensable  to  the  insurance  industry  as 
maintained  by  insurance  companies  in  the  public  consultation,  the  argued  essential 
need  for  cooperation  is  highly  unlikely  to  be  outweighed  by  any  reduction  in  legal 
certainty as a result of the exemption lapsing. 

33. Therefore,  at  present  the  need  for  the  continued  existence  of  a  BER  for  joint 
compilations, tables and studies is questionable, especially when there are alternative 
guidance instruments (including a Communication) that could be used to complement 
the relevant provisions of the Horizontal Guidelines, if appropriate. In conclusion, the 
Commission  considers  that  the  need  for  a  specific  BER  to  ensure  the  proper 
functioning  of  the  sector  and  to  foster  certain  types  of  information  exchange  is 
questionable. 

Common coverage of certain types of risk (pools) 

34. The  stakeholders responding  to  the public  consultation  (mainly  insurance  companies 
and their associations) generally claimed that letting the pools exemption lapse would 
result in a reduction of legal certainty on the admissibility of cooperation in the form 
of  pools  which,  in  turn,  would  increase  compliance  costs  for  insurers  and  result  in 
undue  caution  with  regard  to  the  conclusion  of  certain  pooling  agreements.  It  is 
alleged that this could lead to insurers charging higher premiums and, in some cases, 
even  to  the  dissolution  of  existing  pools,  in  particular  in  the  area  of  aggravated  and 
catastrophic  risks,  which  could  mean  that  certain  co-insurance  products  are 
discontinued, to the detriment of consumers. 

35. However,  the  participating  stakeholders  have  failed  to  provide  concrete  evidence  to 
substantiate  these  general  statements  on  the  alleged  negative  effects  of  a  potential 
non-renewal of the pools exemption. Certain sections of the consultation questionnaire 
asked  for  a  detailed  explanation  of  changes  in  business  conduct  as  a  result  of  non-
renewal and were designed to quantify and rate the ensuing effects on costs and prices; 
however, these remained unanswered by the vast majority of respondents. 

12   Council  Regulation  (EC)  No  1/2003  of  16  December  2002  on  the  implementation  of  the  rules  on 

competition laid down in Articles 81 and 82 of the Treaty 

8 

 
 
                                                            
36. Prior  to  the  launch  of  the  public  consultation,  the  Commission  published  a  study  on 
co-(re)insurance  pools  and  ad  hoc  co-(re)insurance  agreements  on  the  subscription 
market.13  This  was  based  on  interviews  carried  out  throughout  the  EU-27.  Based  on 
the definition in the IBER, only 4614 active pools were identified across the entire EU. 
The  study  concluded  that  ‘[m]any  pools  are  established  to  cover  catastrophic  risk 
(nuclear, environmental, terrorism) but are not the sole alternative for such risks, as 
insurance  markets  and  other  mechanisms,  such  as  state-guaranteed  insurers,  also 
cover  some of  these risks. Alongside such  pools for  major risks, other arrangements 
between insurers exist to deal with risks that the insurance market does not want, or to 
take advantage of a market niche where insurers combine to provide capacity in the 
subscription market’.15  

37. The  number  of  pools  found  was  significantly  lower  than  initially  expected.  Of  100 
arrangements allegedly considered as being covered by the IBER definition, 39 were 
eventually excluded from the scope of the study following interviews.16 The remaining 
61 pools were considered to potentially fit the definition, but 15 of these were found to 
be  no  longer  operative,  i.e.  in  ‘run-off’.17  Almost  a  quarter  of  IBER  pools  had 
therefore decided to leave the market, further reducing the number that would fit the 
definition. 

38. Regarding the use of the pools exemption, the study also indicated that18 ‘[r]esponse 
rates to questions relating to self-assessment, relevant market and market shares were 
disappointing. Some of these pools had not conducted a full self-assessment because 
they  considered  themselves  exempted  for  covering  new  risks  or  they  were  confident 
that  their  market  share  was  below  the  20 %  threshold.  Overall,  awareness  of  the 
insurance BER appeared mixed, though those pools that had reassessed their position 
since the issue of the new BER did not report a change in their compliance status’.  

39. The study showed that19 ‘[t]here are uncertainties as to the definition, with a risk of 
mismatch between industry perceptions of pools and the intentions of the BER, which 
may  indicate  a  need  for  clarification:  these  affect  both  the  identification  of  pools 
themselves and the definition where pool-like arrangements are set up by parties other 
than insurers, particularly intermediaries, which may warrant study outside the scope 
of this report’. 

40. The  study  also  found  that  ‘the  functioning  of  pools  is  heterogeneous  and  each  pool 

requires assessment on its individual merits’.  

13   Study  on  co(re)insurance  pools  and  on  ad  hoc  co(re)insurance  agreements  on  the  subscription  market; 

http://ec.europa.eu/competition/sectors/financial_services/KD0414707ENN.pdf. 

14   47 at EU-28 level. 
15   See Executive Summary of the study, p. ii. 
16    See p. 13, para. 59 and p. 309, Table 2. 
17   See Executive Summary (p. ii), p. 41, para. 162 and Table 13. 
18   See Executive Summary, p. iii 

19   See Exectuvir Summary, p. iii 

9 

 
 
                                                            
41. The  results  of  the  study  were  discussed  in  a  workshop  with  stakeholders  in  March 

2013, which confirmed the main findings: 

 

 

 

forms  of  cooperation  that  differ  from  pools,  but  play  a  similar  role,  already 
exist on the co-(re)insurance market; 

there  tends  to  be  a  lack  of  clarity  on  the  market  as  to  which  of  these  forms 
constitute  co-(re)insurance  pools  within  the  meaning  of  the  IBER  and  could 
therefore benefit from the pools exemption; 

the product and geographical definition of the markets in which the pools are 
active, and the definition of new risks under the IBER, may not be clear for all 
market participants; and 

  although  market  participants  think  that  pools  are  still  necessary  for  certain 
risks,  they  acknowledged  that  the  market  could  be  moving  towards  more 
flexible and pro-competitive co-(re)insurance solutions. 

42. Article 5 of the IBER stipulates that pool agreements are exempted in respect of the 
setting-up  and  operation  of  pools.  The  Commission’s  decisional  practice20 
distinguishes  between  ‘setting-up’  and  ‘operation’  (functioning).  As  regards  the 
former, the Commission considers that the mere fact that a pool might be necessary is 
not sufficient reason to conclude that it does not distort competition. The Commission 
then  looks  into  the  functioning  of  the  pool,  examining  whether  any  additional 
arrangements entered into by its members for its operation are indeed purely ancillary 
to,  and  thus  necessary  for,  its  functioning.  In  several  cases,21  the  Commission  has 
taken the view that a pool cannot be compatible in overall terms if its viability could 
be ensured under less restrictive operational conditions; this remains the compatibility 
standard applied today. 

43. The  submissions  on  market  trends  collected  during  the  review  indicate  that  current 
cooperation between (re)insurers in order to co-(re)insure risks is very heterogeneous 
and  by  no  means  reliant  on  the  institutionalised  pools  exempted  by  the  IBER.  The 
review  shows  a  significant,  and  growing,  market  trend  away  from  institutionalised 
pools formed on insurers’ own initiatives and towards more pro-competitive forms of 
cooperation between (re)insurers. 

44. These  alternative  co-(re)insurance  arrangements  are 

set-up  by 
intermediaries/brokers who build insurance lines or insurance packages on their own 
initiative, or at the request of a customer or  insurer, often by  means of  tendering,  to 
meet  specific  needs.  Unlike  the  traditional  institutionalised  pools,  these  more 
competitive forms of co-(re)insurance are not covered by the IBER, although it could 

frequently 

20   P&I Clubs Decision in 1985 (Cases 30373 and 37143); Assurpol Decision; TEKO Decision; Lloyd’s/ILU 
Decision;  four  comfort  letters  for  nuclear  pools,  Svenska  Atomförsäkringspoolen  (Case  COMP/37.363), 
Pool  Italiano  Rischi  Atomici  (Case  COMP/34.985),  and  Aseguradores  Riesgos  Nucleares  (Case 
COMP/34.558),  see  XXXIst  Report  on  Competition  Policy  2001,  para.  203,  and  Deutsche 
Kernreaktorversicherungsgemeinschaft 
(Case  COMP/36.053),  see  XXXIInd  Report  on 
Competition Policy 2002, p. 218. See also Commission Staff Working Document accompanying the Report 
on the IBER from 2009 (SEC(2009) 364), para. 125. . 

(DKVG) 

21   For instance, Assurpol (OJ L 37, 14.2.1992, p. 16) and P&I Clubs (OJ L 125, 19.5.1999, p. 12). 

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be  argued  on  account  of  their  characteristics  that  they  are  more  likely  to  produce 
shared  efficiencies.  Such  alternative  co-(re)insurance  arrangements  put  insurers  in 
competition with each other to varying degrees, depending on the level of coordination 
between insurers permitted by the intermediary/broker or customer in the course of the 
negotiations.  Since  the  pools  exempted  by  the  IBER  are  therefore  not  without 
alternatives  and  less  restrictive,  more  pro-competitive  means  of  co-(re)insurance  are 
evidently  available,  it  seems  doubtful  that  the  current  IBER  sufficiently  protects 
effective competition in this field while providing benefits to consumers. 

45. The feedback received during the review on the competitive situation was mixed. The 
majority of insurers and associations claim that markets are competitive. However, the 
only  customer  who  replied  to  the  public  consultation  was  of  the  opinion  that  the 
existence  of  pools  meant  that  the  market  for  nuclear  risk  insurance  was  not 
competitive. This view was shared by respondents to a targeted questionnaire sent to 
customers in the energy sector after the public consultation, all of whom were of the 
opinion that the IBER had a negative impact when it comes to negotiating premiums. 

46. Hence, following an in-depth assessment of the information gathered in the course of 
the review, the Commission considers at this stage that the general exemption of pools 
may  not  be  in  line  with  the  strict  conditions  for  the  creation  of  an  exceptional 
instrument such as a BER. A BER for a certain category of agreement is justified only 
when it can be presumed with sufficient certainty that the category genuinely produces 
benefits that are shared fairly with consumers. The exempted restrictions also have to 
be  indispensable,  i.e. it  would  be  impossible  to  achieve  the  objectives  of  the 
cooperation  in  a  manner  that  is  less  restrictive  of  competition.  This  assessment  of 
proportionality  is  delicate  and  can  be  carried  out  only  through  an  individual 
self-assessment of the functioning of the pool and its effects. 

47. Accordingly, in  the current market circumstances  and in  the light  of the information 
available  on  the  use  and  functioning  of  the  IBER,  the  Commission  considers  at  this 
stage that it can no longer be presumed that the restrictive pooling agreements that it 
covers fulfil the four compatibility conditions laid down in Article 101(3) TFEU.22  

48. Moreover, the current pools exemption appears to have marginal use-relevance in the 
co-(re)insurance field. The information available from the review indicates that, in any 
event,  the  exemption  applies  to  a  limited  proportion  of  the  co-(re)insurance  market 
only,  mainly  catastrophic  or  aggravated  risks.  The  Commission’s  study  on 
co-(re)insurance  pools  identified  relatively  few  (only  46)  institutionalised  pools  that 
are potentially covered by the IBER exemption. Furthermore, at this stage the review 
indicates that little use is made of the current exemption, since a significant proportion 
of the potential beneficiaries declared that they consider themselves outside the scope 
of  the  IBER.  In  particular,  two  of  the  four  pools  that  responded  to  the  public 
consultation  and  20  (i.e. two  thirds)  of  the  pools  that  responded  to  subsequent 
questionnaires  sent  to  a  larger  set  of  pools  argued  that  they  do  not  need  the  IBER 
exemption because their cooperation does not restrict competition from the outset. 

22   See paragraph 1.  

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49. Furthermore,  the  review  also  indicates  that  there  are  serious  concerns  about  the 
efficacy of a BER for pools in the insurance sector. The emergence in the insurance 
market of very heterogeneous and complex settings for co-(re)insuring risks, together 
with  the  intrinsic  difficulties  of  defining  relevant  markets  and  calculating  market 
shares  in the  sector,  makes  it very  difficult to determine whether the ‘restrictive and 
clear-cut  legal  criteria’  for  the  creation  of  a  BER  are  satisfied.  The  observations  of 
some stakeholders show that  the definition of ‘pool’  is  ambiguous and imprecise, or 
that it is not clear how to define the relevant markets in insurance. If an exemption is 
difficult  to  use,  because  the  two  elements  that  are  decisive  for  its  application  are 
uncertain, there must be serious doubts as to whether it is suitable, or justified at all. 

3. 

CONCLUSIONS AND PROPOSALS 

50. For  the  reasons  set  out  above,  the  Commission  considers  that,  although  there  are 
indications of an enhanced need for cooperation in the insurance sector in relation to 
the  compilation  and  distribution  of  joint  calculations,  tables  and  studies,  and  the 
co-(re)insurance  of  specific  types  of  risk,  the  strict  conditions  for  the  creation  of  a 
sector-specific BER with respect to these categories of agreement seem no longer to 
be met. 

51. With  respect  to  the  compilation  and  distribution  of  joint  calculations,  tables  and 
studies,  the  added  value  of  a  specific  block  exemption  is  questionable.  The 
Commission’s  view  at  this  stage  is  that  the  functioning  of  the  insurance  industry  no 
longer appears to require an IBER. The Horizontal Guidelines already offer guidance 
on self-assessing the admissibility of this type of cooperation. Also, the Commission 
can,  if  necessary,  provide  specific  guidance,  which  is  an  alternative  and  far  more 
flexible instrument that can be more easily adapted to changing circumstances. 

52. With  respect  to  co-(re)insurance  pools,  the  Commission’s  preliminary  view  at  this 
stage  is  that  renewal  of  the  IBER  is  not  justified,  because  of  its  limited  use  and 
relevance  and  the  concrete  risks  of  misapplication.  For  such  an  exemption  from 
competition  rules  to  be  put  in  place,  the  Commission  must  be  able  to  presume  with 
sufficient certainty that the type of cooperation that it covers satisfies all the necessary 
conditions for a finding of compatibility with the internal market, especially in terms 
of  effectiveness  and  efficiency,  bearing  in  mind  that  the  insurance  market  currently 
provides  a  heterogeneous  and  less  restrictive  set  of  alternatives  to  pools  for  the 
purpose of co-(re)insuring risks, potentially in more competitive conditions. 

53. It  should  be  noted  that  the  lapsing  of  the  exemption  for  pools  would  not  mean  that 
they would be prohibited, but that they would be assessed under the same competition 
rules as other sectors. 

54. Thus, the Commission considers at this stage that a case-by-case, self-assessment on 
the basis of its Horizontal Guidelines, will ensure that they produce net positive effects 
for consumers and competition within the meaning of Article 101(3) TFEU. 

55. It should be noted that all findings and conclusions in this report are preliminary and 
subject  to  the  Commission’s  ongoing  assessment  and  discussions  with  stakeholders. 
This  process  will  culminate  in  the  presentation  of  an  impact  assessment  report  early 
2017. 

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56. If  the  IBER  exemptions  are  not  renewed,  the  Commission  may  decide  to  adopt 
additional  guidance  (in  place  of  the  current  IBER  Communication  that  will  become 
obsolete  once  the  current  Regulation  lapses)  on  the  principles  of  self-assessment  for 
agreements that will no longer benefit from a BER. 

57. Following publication of this report, the Commission intends to organise a stakeholder 
discussion on its preliminary conclusions as part of the impact assessment process. 

58. The  Commission  also  intends  to  publish  and,  where  necessary,  discuss  with 
stakeholders  the  conclusions  of  the  two  current  studies  on  issues  pertaining  to  the 
functioning of the IBER. 

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