EU threat to subscription market recedes
AIRMIC welcomes EU position on subscription market
AIRMIC has met in London with senior European Commission officials to discuss their plans for the subscription market in light of the EU sector enquiry into the insurance industry. Sean Greenaway, a senior official at the EU Directorate-General for Competition, visited the AIRMIC offices for discussions with chief executive John Hurrell and technical director Paul Hopkin.
Last year AIRMIC expressed strong concern that the sector inquiry into the insurance industry, ordered by competition commissioner Neelie Kroes, appeared to threaten the way business is conducted in the London market.The EU report questioned the practice of ‘horizontal co-operation’, where underwriters openly share risks, including terms and prices.
The officials made it clear, however, that they are now satisfied on most points. In particular, they are willing to accept the principle of shared wordings on the same risk.
The one significant change to current practice that is likely to emerge is the stipulation that the lead underwriter’s price need not be binding on the following market.
Other participants in the risk would be free to compete on price against other potential participants in the layer. Brokers would be required to ensure that this opportunity for competition was made clear to the insurers involved.
This apparent change of heart has come as a big relief to many senior players in the market, who feared that new EU rules might make it impossible or impractical to share risks in the traditional way.
AIRMIC’s Insurance Steering Group welcomed the news at its latest meeting.“The EU Commission have listened to the concerns expressed by ourselves and by others and have responded in a positive fashion,” said group chairman Kip Berkeley-Herring. “We believe the subscription market to be pro-competition, a point that we have consistently made to the enquiry.”
