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Member, Beacon International Group, Ltd.
BRUSSELS—The Federation of European Risk Management Assns. wants the European Commission to make changes in its proposal for extending the Block Exemption Regulation as it pertains to coinsurance and coreinsurance pools to ensure the pools do not restrain market growth.
The E.C. has proposed extending the BER as it applies to the pools, but with a one-time “necessity test” to determine whether they qualify for the exemption from anti-competitive laws. The commission is expected to develop a final regulation soon with changes that will replace the exemption that expires in March 2010.
FERMA on Monday released comments it submitted to the E.C. during a consultation period that ended Nov. 30. In those comments, the group said it welcomed an extension of the exemption for pools but is concerned about the one-time necessity test.
The commission holds that the one-time test will determine whether a pool is necessary because its members on their own would not be able to provide sufficient market capacity.
FERMA said such a determination should be ongoing and not a one-time assessment.
“It is of utmost importance to take into account the evolution in insurance markets,” FERMA said in its comments, and the status of pools needs to be regularly checked against “market reality” to evaluate their necessity.
FERMA also said it is concerned by the E.C.’s proposal not to renew the exemption as it relates to sharing the development and distribution of standard policy conditions by direct insurers.
“For large commercial buyers, it reduces transaction costs, facilitates the comparison between policy conditions and provides better contract certainty,” FERMA said of the practice.