The European Commission released its final report on the business insurance sector on Tuesday, building on its interim report from January.

The report, which prompted furious criticism from Biba, raised concerns over reinsurance and co-insurance practices involving the alignment of premiums.

It also highlighted the issue of broker commission transparency, which it says may inflate prices and reduce choice.

The report stopped short of stating these concerns as infringements of the prohibition on restrictive business practices. But it told the insurance industry to justify its business practices under competition rules or reform them.

The commission said it intended to look at the issue in the framework of the planned review by the Insurance Mediation Directive.

Representatives of insurance buyers were quick to agree with the EU’s findings.

Risk managers association Airmic said the report rightly recognised there were areas of the market, especially in the SME sector, that were poorly served.

The Federation of European Risk Management Associations (Ferma) has also long called for transparency over remuneration, saying disclosure has not been satisfactory.

But Biba chief executive Eric Galbraith was highly critical of the report’s findings which he denounced as unnecessary.

He said: “This has been an unnecessary and pointless inquiry led by the EU.

“It could be regarded as an unsuccessful attack on the UK general insurance sector, where the UK and London are leading players.

“It has certainly cost the industry millions of pounds, and for what?

“The UK intermediary sector is well versed in the identification and management of conflicts of interest and Biba has played a leading role in this area.”

Galbraith said he was perplexed as to why the commission would ask the coinsurance/reinsurance industry to justify its position regarding the alignment of premiums when it stated that it has not uncovered any breach.