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Scor takes French rival CCR to Europe over monopoly

Scor CEO Denis Kessler has lashed out at France's state carrier Caisse Centrale de Reassurance (CCR) ahead of filing a complaint with the European Commission, as he bids to break down what he called its "virtual monopoly".

Scor will file the complaint with the European Commission in the coming weeks, Kessler told The Insurance Insider, alleging that the French government gives an unfair advantage to the state-owned catastrophe reinsurer that breaches European competition rules.

As previously revealed by this publication, Scor is seeking a change to the 1982 French law that authorises CCR to provide property cat reinsurance coverage across France with a full state guarantee.

Scor's decision to take the case to the European Commission follows a ruling in favour of CCR by the French Constitutional Council that the relevant Article L 431-9 of the insurance code is in fact constitutional.

"In France fair competition is not a constitutional principle. We have the principle of equality, we have lots of other principles, but we do not have fair competition," said Kessler.

"We don't see why the government should grant CCR privileges that allow it to boast a virtual monopoly on the entire nat cat reinsurance market. The State should only intervene as a reinsurer of last resort, where there is a market gap."

He said that now the French catastrophe scheme was in place, he saw no reason why licensed European reinsurers could not compete with CCR.

He added that the state carrier, which benefits from an AA+ Standard & Poor's rating because of the French sovereign guarantee, not only has a quasi-monopoly at home. It also competes with Scor and other reinsurers in the international market, yet enjoys the same rating as Berkshire Hathaway.

"This also seems unfair to me, because it's much easier to do your job and attract clients [...] government support."

The Scor CEO added: "We can envisage a wide range of different settings where we will still protect insureds. See for instance how the risks from terrorist attacks are insured in France with a smart public-private partnership. I enjoy fair competition, and I consider this to be unfair competition."

"We are in the twenty-first century, not in the twentieth century; [...] we have been for thirteen years. I really believe that we have to invent new ways of combining private-public concerns."

He said Scor's decision to complain now is because the firm is fully recovered from its difficulties of 10 years ago, and no one could legitimately claim that it is responding from a position of weakness and pure self-interest.

"It's very important for us to point out that we are not doing this for Scor," he concluded. "It's really a question of fair competition and we consider this to be crucial in our industry."

"I want the discussion to be open. I hope that the European Commission will say France needs to revise so as to be compliant with [...] EU rules about competition" Kessler said.

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