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Competition and Related Regulation Issues in the Insurance Industry 1998

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Competition and Related Regulation Issues in the Insurance Industry 1998 Competition and Related Regulation Issues in the Insurance Industry 1998 The OECD Competition Committee debated competition and regulation in the insurance industry in June 1998. This document includes an executive summary, an analytical note by Mr. Darryl Biggar for the OECD and written submissions from Australia, the Czech Republic, the European Commission, Germany, Hungary, Italy, Japan, Korea, Netherlands, Norway, Spain, the United Kingdom, the United States, BIAC and CEA, as well as an aide-memoire of the discussion. 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? OECD Guiding Principles for Regulatory Quality and Performance (2005) Regulating Market Activities by the Public Sector (2004) Enhancing the Role of Competition in the Regulation of Banks (1998) Regulatory Reform in the Financial Services Industry, chapter 2 in The OECD Report On Regulatory Reform, Volume I: Sectoral Studies (1997) Insurance and other Financial Services (1992) Unclassified DAFFE/CLP(98)20 Organisation de Coopération et de Développement Economiques OLIS : 14-Dec-1998 Organisation for Economic Co-operation and Development Dist. : 16-Dec-1998 __________________________________________________________________________________________ English text only Unclassified DAFFE/CLP(98)20 DIRECTORATE FOR FINANCIAL, FISCAL AND ENTERPRISE AFFAIRS COMMITTEE ON COMPETITION LAW AND POLICY COMPETITION AND RELATED REGULATION ISSUES IN THE INSURANCE INDUSTRY English text English only 72871 Document complet disponible sur OLIS dans son format d'origine Complete document available on OLIS in its original format DAFFE/CLP(98)20 FOREWORD 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 Roundtables”, is issued to bring information on this topic to the attention of a wider audience. PRÉFACE Ce document rassemble la documentation dans la langue d’origine dans laquelle elle a été soumise, relative à une table ronde sur les questions de concurrence et de réglementation dans le secteur de l’assurance qui s’est tenue en juin 1998 dans le cadre du Groupe de travail n° 2 du Comité du droit et de la politique de la concurrence. Cette compilation qui fait partie de la série intitulée “les tables rondes sur la politique de la concurrence” est diffusée pour porter à la connaissance d’un large public, les éléments d’information qui ont été réunis à cette occasion. Visit our Internet Site -- Consultez notre site Internet http://www.oecd.org/daf/clp OECD 1998 2 DAFFE/CLP(98)20 OTHER TITLES SERIES ROUNDTABLES ON COMPETITION POLICY 1. Competition Policy and Environment (Roundtable in May 1995, published in 1996) OCDE/GD(96)22 2. Failing Firm Defence (Roundtable in May 1995, published in 1996) OCDE/GD(96)23 3. Competition Policy and Film Distribution (Roundtable in November 1995, published in 1996) OCDE/GD(96)60 4. Competition Policy and Efficiency Claims in Horizontal Agreements (Roundtable in November 1995, published in 1996) OCDE/GD(96)65 5. The Essential Facilities Concept (Roundtable in February 1996, published in 1996) OCDE/GD(96)113 6. Competition in Telecommunications (Roundtable in November 1995, published in 1996) OCDE/GD(96)114 7. The Reform of International Satellite Organisations (Roundtable in November 1995, published in 1996) OCDE/GD(96)123 8. Abuse of Dominance and Monopolisation (Roundtable in February 1996, published in 1996) OCDE/GD(96)131 9. Application of Competition Policy to High Tech Markets (Roundtable in April 1996, published in 1997) OCDE/GD(97)44 10. General Cartel Bans: Criteria for Exemption for Small and Medium-sized Enterprises (Roundtable in April 1996, published in 1997) OCDE/GD(97)53 11. Competition Issues related to Sports (Roundtable in October 1996, published in 1997) OCDE/GD(97)128 12. Application of Competition Policy to the Electricity Sector (Roundtable in October 1996, published in 1997) OCDE/GD(97)132 13. Judicial Enforcement of Competition Law (Roundtable in October 1996, published in 1997) OCDE/GD(97)200 3 DAFFE/CLP(98)20 14. Resale Price Maintenance (Roundtable in February 1997, published in 1997) OCDE/GD(97)229 15. Railways: Structure, Regulation and Competition Policy (Roundtable in October 1997, published in 1998) DAFFE/CLP(98)1 16. Competition Policy and International Airport Services (Roundtable in June 1997, published in 1998) DAFFE/CLP(98)3 17. Enhancing the Role of Competition in the Regulation of Banks (Roundtable in February 1998, published in 1998) DAFFE/CLP(98)16 18. Competitition Policy and Intellectual Property Rights (Roundtable in October 1997, published in 1998) DAFFE/CLP(98)18 Available on our Web Site -- Disponible sur notre site Internet http://www.oecd.org/daf/clp 4 DAFFE/CLP(98)20 TABLE OF CONTENTS EXECUTIVE SUMMARY .......................................................................................................................... 7 SYNTHESE................................................................................................................................................ 13 BACKGROUND NOTE............................................................................................................................. 21 NOTE DE REFERENCE ........................................................................................................................... 55 NATIONAL CONTRIBUTIONS Australia ...................................................................................................................................... 91 Czech Republic ......................................................................................................................... 107 Germany.................................................................................................................................... 117 Hungary..................................................................................................................................... 123 Italy ........................................................................................................................................... 133 Japan.......................................................................................................................................... 143 Korea......................................................................................................................................... 147 The Netherlands ........................................................................................................................ 153 Norway...................................................................................................................................... 163 Spain.......................................................................................................................................... 169 United Kingdom........................................................................................................................ 179 United States ............................................................................................................................. 185 European Commission, Part I ................................................................................................... 189 European Commission, Part II .................................................................................................. 197 Business and Industry Advisory Committee (BIAC)............................................................................... 201 Comité Européen des Assurances (CEA)................................................................................................. 211 QUESTIONNAIRE SUBMITTED BY THE SECRETARIAT............................................................... 215 QUESTIONNAIRE SOUMIS PAR LE SECRETARIAT ....................................................................... 219 AIDE-MEMOIRE OF THE DISCUSSION............................................................................................. 223 AIDE-MEMOIRE DE LA DISCUSSION ............................................................................................... 243 LIST OF PARTICIPANTS - LISTE DES PARTICIPANTS..................................................................
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