Competition and Related Regulation Issues in the Insurance Industry

Competition has long played an uneasy role in the insurance industry. If consumers cannot easily observe the financial health of their insurers, competition between insurers may drive premiums down to the point where the risk of failure is high. For several decades the regulatory response was to limit entry and constrain premiums. In addition, special exemptions were granted to this sector under the competition laws. More recently, however, regulatory reform has lead to a substantially greater reliance on competition and a greater regulatory focus on prudential regulation. Against this background, the round-table explores regulatory reform and competition policy issues in the insurance sector. To what extent is it possible to rely on competition in the insurance market? What regulatory controls remain necessary? What should be the limits to the antitrust exemption for this industry? Should insurers be allowed to share information on claims and the magnitude of risks? When does such information-sharing facilitate cartelisation? Is it necessary to have special rules regulating the way that insurance is sold through intermediaries? How should competition authorities interact with insurance regulators in handling competition cases? This document comprises proceedings in the original languages of a Roundtable on Competition and Related Regulation Issues in the Insurance Industry which was held by the Working Party n°2 of the Committee on Competition Law and Policy in June 1998. This compilation, which is one of several published in a series named “Competition Policy