The European Commission has adopted a new insurance block exemption regulation (“BER”) which comes into force on 1 April 2010 and will remain in force until 31 March 2017.

The BER exempts certain agreements between companies in the insurance sector from the ban on restrictive business practices provided for by European competition law rules. It replaces a previous exemption adopted in 2003.

The new BER has renewed two of the four categories of agreements exempted under the old regime, namely information exchanges and insurance pools, with certain amendments.  Two other types of agreement covered by the previous BER – standard policy conditions and agreements on security devices – have been excluded from the new BER, as the Commission considers that they do not require a sector-specific exemption. Companies engaging in such agreements, or in agreements which do not meet the conditions set out in the BER, must conduct their own analysis to determine whether the arrangements are permissible or not.

The exemption of co-insurance and co-reinsurance pools (up to market share thresholds of 20% and 25% respectively) has been preserved in the new BER, but narrowed in scope. The market share is no longer based solely on the gross premium income of members within the pool, but takes account of members’ income earned outside the pool.

New arrangements must be assessed for compliance with the BER as of 1 April.  Insurance agreements in force before 1 April 2010 remain covered by the previous BER until 30 September 2010.  However, insurers are advised to review existing arrangements for compliance with the new BER well in advance of that date to ensure any necessary changes may be implemented in time.