The Bundeskartellamt in Bonn has imposed fines totalling over 20 million Euro against seven public insurance companies and the directors involved. In March this year it already imposed fines totalling approx. 130 million Euro against ten other insurance companies and the directors responsible, against which the parties concerned appealed at the Düsseldorf Higher Regional Court.

The cartel law violations involve above all the industrial property insurance sector (in particular fire, fire consequential loss, EC and All-Risk insurance, and technical insurance) the buildings monopoly insurance sector and property insurance in the hospital sector.

Bundeskartellamt President Ulf Böge: “Evidence has shown that the insurance companies in question have agreed since mid 1999 on how to set insurance premiums and conditions in order to turn around the market to their advantage. This is a clear infringement of cartel law and the persons committing the offence were aware of that fact."

The fines have been imposed against the following seven companies:

• Versicherungskammer Bayern Versicherungsanstalt des öffentlichen Rechts, Munich;
• SV Sparkassen-Versicherung Gebäudeversicherung AG, Stuttgart,
  (as legal successor of Sparkassen Versicherung Baden-Württemberg);
• SV Sparkassen-Versicherung Gebäudeversicherung AG, Stuttgart,
  (as legal successor of SV Sparkassen Versicherung Hessen Nassau Thüringen Gebäudeversicherung AG);
• Provinzial Rheinland Versicherung AG, Düsseldorf;
• Westfälische Provinzial Versicherung AG, Münster;
• VGH Landwirtschaftliche Brandkasse Hanover, Hanover;
• Provinzial Nord Brandkasse AG, Kiel.
  

The basis of the cartel were the so-called FIS principles, which were agreed by the directors of the above companies represented in the Special Committee for Industrial Property Insurance (FIS) of the German Insurance Association (GDV). These principles envisaged among other things:

- no contribution (premium) reductions during current contract periods,
- no retrospective adjustment of premiums.
- Conclusion of new contracts only with opt-out and adjustment clauses.

In addition premiums and deductibles were to be raised and contract conditions adapted accordingly. The companies participating in the cartel safeguarded this anti-competitive behaviour by agreeing to inform each other about the measures applied in the individual companies and not to hinder the so-called improvement measures of their competitors by making favourable offers themselves. The agreements were implemented in several work and discussion groups at director and department head level.

The President of the Bundeskartellamt described the agreements as “a cleverly devised system, because enquiries about previous insurance details and the non-submission of competitive offers made it virtually impossible for insurance holders to obtain more favourable offers from competitors or to switch to another insurance company in the event of premium increases.”

The fines against the insurance companies were calculated on the basis of the additional proceeds generated by the cartel agreements. Account was taken inter alia of both insurance-specific factors (insurance tax, reinsurance proportion) as well as the deterrent effect of the fine intended by the legislator.

Bundeskartellamt President Böge condemned the cartel behaviour as highly damaging to society and accused the companies of undermining the free market system which guaranteed free enterprise by eroding its supporting pillar, the competition principle. The threat of fines by itself obviously could not always guarantee fair productive competition. The companies and their trade associations should themselves become fully aware of their responsibility towards the economic and social system. Through too much misconduct they had recently often been in the public eye and had compromised trust in the market economy system.

The decisions are not yet final. Any appeals filed by the companies or persons concerned within the next two weeks will be decided by the Düsseldorf Higher Regional Court.