Ferma urges renewal of IBER to maintain coverage of large risks

The European insurance and reinsurance federation Insurance Europe has meanwhile called on the EC to renew the IBER in full. It believes the regulation is vital to fostering competition in the insurance market and ensuring the availability of a wide range of insurance products. Both Ferma and Insurance Europe made their views clear to a consultation on the IBER that closed on Tuesday. The Commission will use the consultation to help decide whether to retain, amend or abandon the regulation when it expires in March 2017. The IBER aims to facilitate co-insurance and allow insurers to share information in order to more accurately price risks.hideThe IBER exempts insurers from EU competition rules for certain practices. It permits cooperation between insurers on data compilation to help them calculate the cost of covering risks more effectively. But perhaps more importantly for insurance buyers the regulation allows pooling of subscription capacity via co-insurance or co-reinsurance pools, provided certain conditions are met. This facilitates the coverage of risks that would otherwise not be insurable. In its response to the consultation, Ferma said that coverage of the largest and exceptional risks still needs an exemption from EU competition rules. Julia Graham, President of Ferma, told the EC: "We represent consumers and users of these (re) insurance pools. Non-renewal of the block exemption would change radically the coverage of certain type of risks, but not widen choice for commercial insurance buyers. We believe there is still ground for an exemption from EU competition rules for the IBER.” "If these rules are being challenged and such pools could fall within the scope of EU competition laws, then it is our priority to ensure that policymakers are well aware of the unintended consequences of a non-renewal decision on the scope of coverage and the level of prices for our largest and most exceptional risks," she added. Ferma explained that the current IBER provides legal certainty of exemption from EU competition rules for every (re) insurance pool in the European Union, and this benefits all stakeholders; both providers of insurance capacity and insurance buyers. Without the exemption, such pools would come under the EU general guidelines on horizontal cooperation agreements that allow wide discretion to national competition authorities, pointed out Ferma. It believes such a change would result in the use of expensive legal services to assess the compliance of such arrangements in multiple jurisdictions 'diverting investment from core, value-generating activities'. In its response to the consultation Insurance Europe said the IBER is crucial in supporting competition within the insurance market and called for its full renewal. It said the IBER enables insurers to form pools to cover specific risks collectively in instances where individual companies would not be able to insure them alone. It also pointed out that the IBER provides the legal certainty necessary for insurers to cooperate when compiling data and conducting joint studies. This allows insurers to better understand and price risks, it added. The IBER allows new competitors to enter markets, as well as enabling small and medium-sized insurance companies to compete with their larger rivals, it continued. William Vidonja, Insurance Europe's Head of Single Market and Social Affairs, commented: "The competition fostered by the IBER has an important impact on insurance coverage and pricing. It opens up markets to new competitors, and so results in more choice in terms of insurance suppliers and products for policyholders.” "Constant technological developments make the continued cooperation of insurers, which is enabled by the IBER, essential in ensuring that policyholders' interests are protected and their constantly evolving needs and demands are met," he added. "The renewal of the current IBER is essential for insurers in Europe. Without the legal certainty provided by the IBER there is a serious risk that insurers may stop cooperating and this would have a detrimental impact on competition in the industry, and ultimately policyholders," he concluded.

Ferma urges renewal of IBER to maintain coverage of large risks

Want to read this article?

Read Next

Global data breaches double in 2023 driven by extortion and third-party software attacks

Social inflation set to continue driving US liability rates: AM Best

Zurich appoints Adriana Scherzinger group head of captives

Marsh McLennan achieves ‘Autism Confidence’ status

New management liability policy from digital MGA Aurora

Global data breaches double in 2023 driven by extortion and third-party software attacks

Social inflation set to continue driving US liability rates: AM Best

Zurich appoints Adriana Scherzinger group head of captives

Marsh McLennan achieves ‘Autism Confidence’ status

New management liability policy from digital MGA Aurora

Want to read this article?

Read Next

Global data breaches double in 2023 driven by extortion and third-party software attacks

Social inflation set to continue driving US liability rates: AM Best

Zurich appoints Adriana Scherzinger group head of captives

Marsh McLennan achieves ‘Autism Confidence’ status

New management liability policy from digital MGA Aurora

Related Articles