Aviation insurers escape EC courtesy of BLG, DLA

Barlow Lyde & Gilbert (BLG) and DLA Piper Rudnick Gray Cary have secured success for the London aviation insurance market in a landmark competition case.

The European Commiss-ion launched an investigation into practices in the industry in the aftermath of the 11 September terrorist attacks in the US.

Following the attacks, insurers worked together to raise rates and reduce cover. The Commission said that this cooperation impeded the market from working “as well as it should” and began an investigation with the potential for legal proceedings.

However, BLG partner David Strang, acting for the Lloyd’s Market Association (LMA) and Alexandra Kamerling of DLA Piper, representing the International Underwriting Association of London, led lengthy talks which settled on 23 March.

The settlement introduces a ‘crisis response protocol’ designed to maintain competition between insurers for situations such as 11 September. There will also be more consumer involvement in the drafting of the standard wording in aviation policies and clauses, giving customers more say in their policies.

In return for accepting the new procedures, the industry will escape further investigation by the Commission. Strang said: “We’re extremely pleased to have resolved this in a way which has proved satisfactory to both parties. There’s been no finding of wrongdoing by the aviation market.”

The probe was the largest competition investigation into the insurance market to date and the first competition work that BLG has done for the LMA.

Juan Rodriguez, a European Counsel at Sullivan & Cromwell‘s London office, acted as the principal liaison between the LMA, IUA and the European Commission during the negotiations. Rodriguez was responsible for drafting the crisis response protocol.