Bundeskartellamt prohibits insurers’ pool covering pecuniary loss liability risks for auditors and chartered accountants

The Bundeskartellamt has prohibited four insurance companies (Allianz, AXA, R + V Allgemeine Versicherung and Victoria Versicherung) from continuing to jointly insure the pecuniary loss liability risks of auditors and chartered accountants from 2009 via the insurers’ pool in Wiesbaden (“Versicherungsstelle Wiesbaden”).
The insurers’ pool dates back to a state directive from the 1930s and has been maintained until today by the four private insurance companies mentioned above. The insurance companies only jointly offer pecuniary loss liability insurance via the insurers’ pool. As a result insurance cover is only provided at standard premiums and terms. The assumption of risk is also undertaken by the insurance companies concerned on the basis of a stipulated quota arrangement.
As a result of this cooperation within the insurance pool there is no competition between the insurance companies for insurance premiums and conditions or for service quality in claims processing. The market power of the insurers’ pool is evident also from the fact that it has been able to achieve significant premium increases by restructuring its tariffs without seriously jeopardizing its market position. This cooperation between insurance companies is therefore in violation of German and European competition law.

In its assessment the Bundeskartellamt established that each insurance company involved can independently insure auditors which do not belong to the group of the so-called Big 4. Cooperation in the provision of insurance for the Big4 (KPMG, Ernst & Young, Pwc, Deloitte & Touche) is exempted from the prohibition.

The interim periods granted in the decision ensure that both the insurers and the auditors can adjust to the new market conditions and appropriate and continuous insurance cover can be provided. With this decision the Bundeskartellamt aims to activate competition and enable the entry of newcomers to the market by breaking up a cartel which has determined the market for decades.