Stronger EU rules on motor vehicle insurance are in the pipeline. Through its recent proposal to amend the current EU motor insurance Directive, the European Commission is striving to attain better protection for victims of motor vehicle accidents and enhanced rights for policyholders.
The current EU motor insurance directive ensures that on the basis of a single premium, EU residents can travel anywhere within Europe with their vehicles without the need to buy additional insurance. Obligatory minimum amounts of cover which must be provided by insurance policies anywhere within Europe are stipulated by this law. The Directive also caters for a high protection of potential victims of motor vehicle accidents wherever they might be in Europe, that is, even if the accident does not occur in the member state of residence.
A number of changes to the current rules have now been proposed by the European Commission. The new rules will ensure that, in the eventuality that the insurer of a vehicle responsible for an accident becomes insolvent, victims will be rapidly and fully compensated by a compensation body located in their member state of residence. Should the insurer be one which provides cross-border insurance services, the compensation body in the victim's member state of residence will initially pay the claim of the victim. It will then be reimbursed by a compensation body from the insurer's home member state. Quick compensation to the victim is hence guaranteed.
In order to facilitate the authentication of claims history statements by insurers, the proposal harmonises the content and the format of these statements across the EU. Furthermore, the proposed rules provide that there should be no discrimination based on nationality or on the basis of the previous member state of residence of the policyholder, when taking claims history into account for the purpose of determining premiums.
States will be required to take effective action to reduce risks of uninsured driving
Insurers will be obliged to treat claims history statements issued by an insurer in a different member state equally to those issued domestically. In order to ensure the enforcement of this obligation, insurers will be required to disclose how claims history is taken into account when calculating motor insurance premiums for current and prospective clients. This should ensure that citizens purchasing insurance abroad can benefit from more advantageous insurance premiums, on the same level as domestic consumers.
In an effort to mitigate the problem of uninsured driving, the Commission is proposing measures to be taken at both national and European level. At national level, member states will be required to take effective action to reduce risks of uninsured driving. They are urged to do so by conducting domestic systematic verification of motor third party liability insurance of registered policies, carrying out roadside checks and imposing effective penalties for owners of uninsured vehicles. At EU level, the new rules are proposing that new, unobtrusive technological developments, such as number plate recognition technology, are utilised in order to verify the insurance obligation. These checks can be carried out provided they are necessary and proportionate, are part of a general system of checks on the national territory, are not discriminatory and do not require the vehicle to stop. In this way, there is no interference with the free movement of persons and vehicles within the EU.
The proposal will ensure equal minimum protection across the EU in case of an accident with a motor vehicle. It sets out harmonised minimum protection levels for personal injury and material damage across the EU, as current minimum levels differ slightly between member states. Member states remain free to set, at national level, higher minimum amounts of cover than those foreseen in the directive.
In a single, internal market such as the EU, with free movement of people as one of its cornerstones, it is of the utmost importance that both insurers and policy holders are regulated by a single set of harmonised rules. In this way, a level playing field is guaranteed and this, without impinging on the rights ofEU citizens to benefit from full freedom of movement across EU territory.
Mariosa Vella Cardona is a freelance legal consultant specialising in European law, competition law, consumer law and intellectual property law.
mariosa@vellacardona.com