The London insurance market could soon be facing European Commission (EC) enforcement proceedings for anti-competitive practices, a City firm has warned.


Reynolds Porter Chamberlain partner Andrew Hobson said the latest EC report into the London insurance market identified several areas of perceived anti-competitive practice. These included the widespread use of a 'best terms and conditions' clause, allowing all underwriters of a particular risk to underwrite their portion of that risk at the highest price agreed by any of the other underwriters.



Mr Hobson said: 'The EC believes this practice puts an upward pressure on insurance premiums for customers, which would be clearly anti-competitive. But the EC has an incomplete understanding of what goes on in the insurance market, particularly so in the subscription market [where risk is spread]. Lawyers should be lobbying the EC to understand that competition can thrive in a "follow the leader" structure without breaching competition law.'



The EC report also pointed to a lack of transparency regarding brokers' commissions and the insurance industry's block exemption from certain elements of competition law.



Jonathan Rayner