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BRUSSELS,BelgiumAlleged "sustained" differences between the profitability of insurance markets within different European member states suggests that there is potential for price cuts for commercial insurance buyers.
Also, long-term insurance contracts and distribution structures may be reducing competition in several European Union member states, and buyers in some cases are subject to terms and conditions that are not in their best interest, according to the European Commission's interim report on competition in the insurance market.
Intermediaries, meanwhile, are in some cases involved in conflicts of interest when they provide services to clients, as well as insurers and receive renumeration from the underwriters, the report states. A lack of transparency among intermediaries is said by the report to hamper competition.
The 164-page report released today "identified factors on all levels of the supply chain that may prevent the markets from working as well as they should," said Neelie Kroes, the EC's competition commissioner, in a statement. Comments from hundreds of insurers, reinsurers, intermediaries, risk management associations and others shaped the findings.
A public hearing with market participants to discuss the findings will be held in Brussels on February 9.Among the report's main findings, the use of long-term insurance contracts and certain distribution systemsnotably in Austria, Italy, the Netherlands and Sloveniawere said to be used in ways that discourage new insurers from entering the marketplace.
Some reinsurers in the EU use "best terms and conditions" clauses in contracts with direct insurers that harmonize terms at levels most favorable to the reinsurer, the report found, which means the ultimate buyer of insurance is subject to less-than-favorable terms and conditions.
Information and a link to the report can be found in press releases at http://europa.eu/rapid.