Industry leaders react to the announcement that standard wording is set to lose its EU exemption

Insurers have called on the European commission to help them stay within competition law.

The commission announced last week it was likely to drop standard wording in contracts and standard security devices from the Block Exemption Regulation (BER).

This could lead to some insurers ending co-operation on standard contracts and security devices because they fear breaching vague European laws, instead of the more clearly defined BER.

However, Rob Gillies, head of market processes at the Lloyd’s Market Association (LMA), said the organisation would push the commission for clear guidelines “because if the block exemption is to lapse we need something more specific related to this activity. It will make the self-assessment process more effective.”

Gillies said the LMA was in touch with the commission and the Brussels body had listened to its opinions on standard wording in the past.

The commission’s review of the BER said it would continue to back insurance pools and underwriters working together to produce and share statistics.

Shared statistics are especially important for helping the industry’s risk management.

The commission’s decision on insurance pools means underwriters can agree unified strategies to take on specific risks.

Andrea Kamerling, EU competition lawyer at DLA Piper, said she suspected many people would think they would not fall foul of competition law if they still adhered to the old block exemption rules.

Mark Clough, a QC at consultant Addleshaw Goddard, said: “From an objective point of view, they have not changed the fundamental bits. I think the security aspect was a bit fringe.

“The only controversial question was whether they needed to take out standard terms and conditions.”

The commission will hold a public hearing in London on 2 June before publishing any draft regulation about renewing the BER. The regulation is due to expire in March next year.

Why the BER exists

Article 81 of the European Commission Treaty restricts anti-competitive practices. However, section 3 lifts the ban on certain practices, allowing insurers to co-operate in some areas. The problem is that its meaning is down to interpretation.
The BER, which came into force in 2003, was designed to provide greater clarity. Insurers are concerned that, if the regulation is not renewed next year, they will have to comply with the more complicated article 81 and section 3 instead.