NMa Does Not Approve Health Insurers' 'Solidarity Protocol'

The Netherlands Competition Authority (NMa) has not approved the so-called 'Solidarity Protocol' of the private health insurers united in Zorgverzekeraars Nederland (ZN). According to NMa, these agreements restrain competition between insurers and will result in premium increases for policyholders. NMa has therefore not granted an exemption from the prohibition on cartels.

The agreements contained in the Solidarity Protocol limit the freedom of private health insurers to attract policyholders with lower premiums at the expense of competitors. The agreements consequently result in less competition between private health insurers and to premium increases, in any event for young policyholders. Since almost all private health insurers in the Netherlands are affiliated to ZN, these effects would occur throughout the market. According to NMa, the agreements are therefore also contrary to the prohibition on cartels set out in the Competition Act.

The Solidarity Protocol sets a bandwidth for premium differentiation on the basis of age for personal insurance products. The Solidarity Protocol also prevents lower premiums for group insurance (for instance, insurance taken out by companies for their employees) from being subsidised by higher premiums for personal insurance. With a view to this, the Protocol links the claim/premium ratio of the group insurance portfolio to that of the personal insurance portfolio. NMa is of the opinion that, in principle, each insurer must itself determine the degree of solidarity which it maintains within its group of policyholders. The Solidarity Protocol, however, results in a collective standard with regard to the degree of solidarity in this market.

ZN has not been able to present a plausible case as to why the Solidarity Protocol will result in appreciable economic advantages which outweigh the disadvantages in relation to competition. A fall in the premiums of older policyholders is not to be expected. Research even seems to suggest that the premiums for older policyholders will increase as a result of the introduction of a premium bandwidth for personal insurance products. If the reduction in premiums for older policyholders, which ZN expects, were to occur, the funds required for this would have to be raised from younger policyholders in the form of an increase in premiums.

Limiting the premium subsidisation of group contracts by personal contracts will also result in premium increases, namely for people insured under group insurance contracts. The reduction in premiums which ZN expects for personal insurance policyholders, as a result of a reduction in premium subsidisation, is not likely to occur, in NMa's opinion, because this reduction will be limited by the bandwidth for premium differentiation. The decision to dismiss the application for exemption means that the Solidarity Protocol is subject to the prohibition on cartels and is prohibited.