News

Thu, 4 Nov 2010

Marine Insurance Agreements - An infringement of EU Competition Rules?

On 26 August 2010 the European Commission announced that it is to open formal proceedings in order to investigate certain provisions of claim sharing and joint reinsurance agreements in the marine insurance sector that may infringe the anti competition rules under Council Regulation 1/2003.

Marine insurance is a unique species of insurance and the European Commission has concerns over the agreements in the framework of the International Group and the Protection and Indemnity Clubs, namely the International Group Agreement and the Pooling Agreement which contain certain rules for the sharing of insurance claims and joint reinsurance as well as governing the contractual relationship between the clubs and their members.

It appears that these agreements are not automatically covered by the new anti competition/anti trust block exemption for the insurance sector which came into force in April 2010. In essence the European Commission will examine whether provisions of the agreement dilute the competition between the P&I Clubs as well as restricting certain commercial insurers and other mutual P&I insurers to the marine insurance industry.

The proceedings by the European Commission do not imply that there is absolute proof of an infringement of the anti competition rules but the commission will conduct a thorough investigation as a priority and the relevant insurance sector companies will have their opportunity to give their views and comment on the proceedings before the European Commission reaches a decision.