How to co-insure... another waste of EU money

Occasionally something of such fundamental importance lands on your desk that you stop in your tracks while you consider its implications.

If recent comments attributed to Irmfried Schwimann, who is leading the European Union’s Competition Directorate’s investigation into the commercial insurance sector are anything to go by, then those involved in the London subscription market and co-insurance arrangements ought to be having just such a moment.

At a recent seminar, Schwimann is reported as saying that while she understands that having the same terms for a particular risk is more convenient for the insured, having the same price does not seem to be necessary. It’s a worrying development that could go to the heart of the way the European co-insurance and London subscription markets operate.

It could result in a fundamental change to the way in which the market operates, but at what cost to the industry? Will the customer benefits flowing from such reengineering be worth the time, effort and expense that this review has undoubtedly led to?

The commission’s inquiry into business insurance has been dragging on since June 2005 and no stone appears to have been left unturned. The inquiry now appears to have started scraping the bottom of the barrel.

In reality it would be hard to find a more competitive market than London and it is vital that its ability to deliver flexible and keenly priced products to its clients is not adversely affected by theoretical considerations carried on by distant EU officials and diplomats in Brussels.

Brussels’ bureaucrats have returned to their desks this week after the long summer break and what I hope to see now is all areas of the UK industry communicating at the highest levels about this potential intervention in co-insurance arrangements if we are to avoid unnecessary changes being handed to us as a fait accompli.

Eric Galbraith is Chief Executive of Biba