Officials satisfied with 'shared risks' wordings in London market
The European Commission (EC) is understood to have backed down over some of its concerns about the way business is conducted in the London market.
At a recent meeting with representatives from the insurance industry and risk managers, EC officials indicated that they were broadly satisfied with the workings of the subscription market.
The Commission, which is currently investigating the operation of commercial insurance markets, had previously expressed concern about the practice of ‘horizontal co-operation’, whereby underwriters openly share risks, including terms and prices.
According to risk managers’ trade body Airmic, which attended the meeting, the EC officials made it clear that they were willing to accept the principle of shared wordings on the same risk. “The one significant change to current practice that is likely to emerge is the stipulation that the lead underwriter’s price need not be binding on the following market,” Armic said in a statement.
“Other participants in the risk would be free to compete on price against other potential participants in the layer.
“Brokers would be required to ensure that this opportunity for competition was made clear to the insurers involved.”
David Gittings, chief executive of the Lloyd’s Market Association (LMA), said: “The LMA met representatives of the EC. The meeting contributed, we believe, to the Commission’s understanding of the operation of the Lloyd’s subscription market.”
The EC was unavailable for comment as Insurance Times went to press.