LONDON—The U.K. insurance buyers association, the Association of Insurance and Risk Managers, has told the European Commission that it wants to see the block exemption to certain European competition rules enjoyed by the region's insurers, continue.

The insurance industry's block exemption is due to expire in 2010, and by March 2009, the Commission must present to the European Parliament and Council of Ministers a report on—and any amendments to—the block exemption regulation. Industry stakeholders—including insurance buyers—were originally given until July 17 to provide comments to the Commission before it makes its decision, although this was extended until August.

AIRMIC this week made a submission to the Commission's Directorate General for Competition, supporting continuation of the block exemption. The association described the current arrangements as "pro-competitive," saying that the exemption allows insurers to share policy wordings and some administrative arrangements when co-writing large risks.

"The exemption encourages competition by making it easier for new players to enter the market when they might otherwise lack the resources to participate in very large insurance programs," AIRMIC said in a statement.

"We believe that the block exemption acts in the interests of commercial insurance buyers, who would otherwise have less choice, said Kip Berkeley-Herring, chair of AIRMIC's Insurance Steering Group, in a statement. "This is one of those situations where allowing suppliers to cooperate in a few well-defined areas actually increases the amount of competition out there," he added.

There is one area where U.K. insurance buyers would like to see changes in the subscription market, however. "The association does, however, support proposals to allow the following market to compete on price, rather than automatically following the rate set by the lead underwriter," AIRMIC said.

London market insurers have also responded to the Commission's consultation on the future of the block exemption.

In its submission, the London-based International Underwriting Association argued that if the block exemption were not renewed, the loss of efficiency and a lack of certainty would be to the detriment of policyholders. "IUA members are anxious that the regulation is maintained since it has helped provide insurers and reinsurers with a relatively clear framework of competition law for the production of legal wordings that are clear to all," the association said in a statement.

In particular, the association defended the application of the block exemption to the use of standard policy wordings and clauses.

The Lloyd's Market Association, the body that represents Lloyd's of London insurers, also submitted its response to the Commission on the future of the block exemption. "The LMA has submitted a detailed response to the Commission seeking renewal of the insurance block exemption, specifically as regards the production of model policy wordings," said Rob Gillies, head of market processes at the LMA.