|Vol.7, No.23, 7.6.01, p25
THE European Commission is considering legal action against Denmark over a law which insurance brokers say discriminates against foreign firms.
The international brokers' organisation BIPAR claims the law stifles competition and reinforces the position of dominant Danish public insurer KGF. The Insurance Broker Business Act, introduced last year, prevents brokers from charging commissions when they bid for public contracts. "If you're a French or UK broker and you want to participate in a Danish tender you can't," said a BIPAR spokesman, "because you work on a commission basis."
The organisation claims the move contravenes Article 49 of the EU Treaty on Freedom of Services, designed to allow European firms to compete for contracts on an equal footing with domestic firms anywhere in the EU.
Furthermore, it says the law discriminates against foreign insurance companies who offer their products via commissioned brokers, and who are not equipped to participate in an alternative fee-based system.
The nine-page BIPAR complaint states: "The commission system is an integral part of the insurance system in most EU member states ... consequently this [law] would reduce the number of possible competitors, and in particular of foreign insurance companies, in the Danish tendering process, and thus the efficiency of the tender itself."
It also quotes the 1992 public procurement directive, which refers explicitly to insurance services.
Another submission by the Danish brokers' association FMF suggests the domestic market for public insurance contracts is already dominated by the traditional insurer KGF, a mutual company owned by local authorities.
The FMF document concludes that "the prohibition of commission has led to a situation where foreign insurers are locked out and that KGF is the primary winner". KGF won around two-thirds of all municipal insurance contracts tendered last year after the implementation of the new law.
The European Commission is considering legal action against Denmark over a law which insurance brokers say discriminates against foreign firms.
|Countries / Regions