The European Commission has taken the first step to investigate the competition inquiry into the business insurance sector, having published its preliminary report indicating evidence of fragmented markets and highlighting factors that may adversely affect competition.

The preliminary findings of the commission’s inquiry into the business insurance sector have identified factors on all levels of the supply chain that may prevent the markets from working as well as they should, said EU competition commissioner Neelie Kroes. With the help of the comments received during the consultation, we intend to look at these issues in more detail before finalizing the sector inquiry report.

Preliminary findings include a significant difference in underwriting profitability in different EU member states, suggesting market fragmentation. The inquiry has also found that, in some member states, long-term insurance contracts, along with certain distribution structures, may potentially reduce the scope for competition. In addition, a lack of transparency of intermediaries’ remuneration was also discovered, which reduces the potential for price competition in relation to insurance mediation services.

The preliminary findings will be discussed in a public hearing due to be held on February 9, 2007 in Brussels.