Nick Lowe is disappointed by the European Commission decision
The news that the European Commission is to renew parts of the Insurance Block Exemption Regulation (BER) is welcome.
But it is disappointing that the production of model wordings has been left out. It is a decision that could make companies less willing to use such wordings and could lead to a less efficient reinsurance market and increased legal costs.
The International Underwriting Association (IUA) has argued consistently that there is much to be gained by renewing the BER on the use of standard policy conditions and models. Its relatively transparent framework of competition law has helped insurers and reinsurers with legal wordings that are clear to all, so removing the need for regular recourse to costly legal counsel.
Without the block exemption, the market may have to seek advice many times over, resulting in delays and ultimately higher premiums for clients.
The legal costs involved in agreeing a new wording for every similar contract will be uneconomic to both contracting parties and, ultimately, will be reflected in the quality of offer, availability of choice and cost to the customers.
In short, model clauses contribute to the cost-effectiveness of the industry and the availability of insurance.
Nick Lowe is director of government affairs at the International Underwriting Association