The Office of Fair Trading (OFT) has granted UK terrorism reinsurer Pool Re an exemption from the Competition Act.
While most aspects of that arrangements for Pool Re fall outside the scope of the Chapter 1 prohibition of the Competition Act 1998, some of the rules covering the Pool Re arrangements have the effect of preventing, restricting or distorting competition, said the OFT.
The Pool Re rules which come under the Chapter 1 prohibition are:
· Members to offer terrorism cover only in conjunction with general cover for commercial property,
· Members to reinsure all their terrorism insurance for commercial property with Pool Re, and
· Policyholders who buy terrorism insurance for a commercial property, to buy terrorism cover for their entire portfolio of commercial properties from Pool Re members.
But the OFT said it has concluded that the benefits of these rules outweigh the anti-competitive effects and that it has granted an exemption from the Competition Act.
The benefits include:
· Ensuring that all commercial properties have access to terrorism cover,
· Facilitating investment in business by reducing risks, and
· Helping business survive a terrorist act, minimising the adverse economic impact and improving economic progress.
The OFT said it had publicly consulted on its proposals to issue an exemption for Pool Re, after it announced its intention on 11 February 2004. It said while it did receive some public responses on its proposals, none of the responses had substantially altered its initial proposals.
