Answer Consultation Paper on the Modernisation of the Motor Insurance Directives
Publication date: 12 February 2001
1. Minimum compensation amounts
The AIT & FIA believe that it would be useful and appropriate to extend the legislation on compulsory motor insurance to include unlimited cover. The risk of an unreasonable premium increase is controllable and premium cover ensured from the actuarial point of view. The Automobile Association (UK), for instance, offers unlimited motor insurance cover, and they cannot see why this should not become a European standard. In Germany, more than 90% of policy holders have voluntarily chosen "unlimited cover" (maximum total amount of compensation: 12.5 – 15 million DM for personal damage depending on the insurance company; unlimited cover for material damage). The difference in premium as compared to limited cover under the Second Motor Insurance Directive (84/5/EEC) is only about 1.5%. Claims statistics show that in Germany with its more than 50 million covered passenger cars and about 4 million settled accident claims, there are only a few dozen cases each year where claims for personal damage exceed 5 million DM. Introduction of unlimited cover at European level – already applicable legislation in some countries – will eliminate the differences in cover and prevent the numerous problems with regard to periodical adjustments. Such harmonisation would promote free movement at European level.
2. Expansion of the scope of victims covered
Since insurance companies are only obliged to cover legal claims, compensation for damages is paid only if there is a civil law basis. Outside insurance law proper, the EU currently is not competent to amend or supplement liability and damages legislation. The proposed solutions are thus not relevant because the EU has no competence with regard to this matter, and in any event not with regard to those countries where such rights and claims are not covered by civil law provisions. It would further not be appropriate to harmonise parts of the widely differing national legislation on civil damages through EU directives. Most legal systems will not provide for insurance cover of a pedestrian or cyclist, who may even be responsible for the accident, by a driver/vehicle owner who is neither at fault nor liable under absolute liability. Legal systems providing for the extended cover of pedestrians and cyclists may provide a more limited cover or compensation in areas where legal systems not recognising such no-fault (=strict) liability with regard to pedestrians and cyclists would be preferable for the victim. Therefore global assessment of a premium increase generated by such measure would be rather tentative. Car drivers involved in an accident with a pedestrian or cyclist would suffer a downgrading of their no-claims bonus.
The AIT & FIA in principle welcome measures for the protection of vulnerable road users but believe that the measures proposed under this item are not an issue for the modernisation of the motor insurance directives.
This would, moreover, be an issue for national civil liability legislation of the individual Member States.
3. Regime of Services Representatives
So far, this issue has not played any discernible role in the settlement of accident claims or in the advice provided to motorists by automobile clubs.
4. Definition of the "territory in which the vehicle is normally based": false plates and temporary plates
The AIT & FIA agree with the suggested solutions, i.e. liability of the insurance company or the compensation fund of the country of last valid registration of the vehicle. From the point of view of the victim, the compensation fund of the country where the accident occurred should be held liable if it is impossible for factual or legal reasons to identify the country of last valid registration. We also agree to the suggested solution regarding liability in case of temporary plates or provisional plates.
5. Derogation of the obligation to insure certain vehicle
The signatory states of the Schengen Agreement can no longer check on green cards or border insurance. States where motor insurance is compulsory cannot check whether a vehicle from a country where insurance is not compulsory is covered or not. However, in case of the suggested deletion of Art. 4b of the Directive 72/166/EEC, all vehicles would have to have motor third party liability insurance in all EU member states, even those which would be exempted from this requirement by most national legislators because they present a low risk. This consequence would seem to be disproportionate and unreasonable.
The border checks established in the present version of Art. 4b of Directive 72/166/EEC are intended to balance the differences between states with compulsory insurance and those making use of the exemption provided in Art. 4b of the Directive, putting a driver from a country with compulsory insurance (according to Art. 4b) who is the victim of a collision with a foreign vehicle in the same position as if the other vehicle involved in the accident had been from his own country.
Before amending or deleting Art. 4 b of the First Motor Insurance Directive, a thorough comparison of the national provisions for exemption from compulsory insurance needs to be made to avoid unreasonable consequences. There is no need for provisions regulating the cross-border traffic of vehicles which are exempted from compulsory insurance in most EU member states. Instead of being deleted, Art. 4b of the Directive should specify which vehicles can be exempted from compulsory insurance throughout the EU. All other vehicles would need to have insurance. It would then no longer be necessary to balance the differences between member states with compulsory motor third-party liability insurance and those without such compulsory insurance.
Another feasible solution would be to provide for settlement of claims through national aid organisations for road traffic victims in cases where insurance is not compulsory in the country of origin but is compulsory in the state where the accident occurred.
The AIT & FIA reject the abolition of Art. 4 b) of the Directive and request harmonisation along the lines described above. The AIT & FIA however agree with the second part of the proposal recommending that Art. 4 a) of the Directive should be retained.
6. Direct right of action for the victims of any motor accident in the community caused by the use of vehicles insured and normally based in any member state
The direct right of action introduced in the Fourth Motor Insurance Directive (2000/26/EC) for the victims of accidents abroad would result in unequal treatment of residents and non-residents in countries which currently do not have such direct right of action. We therefore support the suggestion to grant direct right of action against the responsible motor insurance company to all victims throughout the EU, even if the accident involves two residents of the same country. AIT & FIA agrees to the suggested provisions.
7. Reasoned offer procedure in any motor accident
Again, the principle of equal treatment requires that the time limit of three months for a reasoned offer of compensation or a reasoned reply should not only apply to accidents abroad under the Fourth Motor Insurance Directive, but to all accidents involving vehicles covered by motor third party liability insurance across the EU. AIT & FIA agrees to the Commission's suggestion.
Excesses must never be relied on against the victim of an accident. This seems to be a matter of course in most EU member states, but, according to our experience, causes considerable problems in some countries. We therefore welcome the suggestion to include an express prohibition in the Motor Insurance Directives.
9. Temporary stays in other member states
With regard to the freedom of movement of persons within Europe, issues such as vehicle registration, motoring taxation and motor third party liability insurance continue to be problematic also according to the experience of automobile clubs. There is a variety of different and not very transparent regulations regarding these issues. AIT & FIA therefore explicitly welcomes the Commission's initiative to ensure continued insurance cover under the original insurance contract in coordination with DG MARKT, DG TRANS and DG TAXUD. However, especially with regard to temporary stays abroad for academic or professional reasons which do not involve a complete change of residence, the suggested six months period would seem too short. Rather, a general minimum period of twelve months not limited to professional or academic reasons should be provided. There is also an urgent need for harmonisation and increased transparency of the regulations governing vehicle registration and vehicle taxation, since there is much legal uncertainty with regard to these issues. However, it may be useful to cover the questions "long-term stays abroad, vehicle export, secondary residence, etc." and related problems in a separate directive, because issues of registration, taxation and insurance belong closely together. This would help to increase transparency of the overall complex and provide for greater legal certainty.
10. Short term cover for vehicles to be exported - secondary residences
Also the automobile clubs have noted that their members experience considerable problems regarding vehicle export and secondary residence, and agree with the Commission that there is need for regulation. Apart from the fact that it would be best to cover these issues in a separate directive providing comprehensive regulation of all related issues and problems (cf. section 9), we agree to the Commission's suggestions. Alternatively, the border insurance operator should be required to offer insurance.
11. Insurer's statement on freedom of damage or number of accidents
We agree to the suggestion to provide for a standardised European insurance report on a policy holder's claims history. This would enable vehicle owners to "take along" no-claims-bonuses to another country. The information contained in the insurance report of the country of origin must be accepted in the destination country, and the policy holder must be treated there as if he had presented the insurance report of a national insurer. If national regulations provide for recognition of a specific no-claims-bonus, it must also be granted to residents of other EU member states. It must be ensured that the insurance report is practicable and forge-proof.
12. Random checks and Schengen
The systematic checks on green insurance cards carried out in some EU member states even after the expiry of the deadline for implementation of directive 72/166/EEC and the illegitimate imposition of fines and other sanctions show that it is important to find a clear and unambiguous wording for this provision (Art. 2 (1) second paragraph). It must be emphasised that such checks are generally to be avoided and that isolated checks should be carried out in exceptional situations only. A clear definition of such exceptional situations would be useful. Vague wording expanding the scope of possible exceptions must be avoided.
13. Suppression of the member states' option to limit compensation to material damages in case of accidents caused by non-identified vehicles
The AIT & FIA recognise that in this field there is a significant risk of abuse of insurance (fraud). If the obligation to pay compensation for material damages is to be included also for hit-and-run offences where the vehicle causing the accident cannot be identified, ways must be found to prevent such fraud (and the risk of resulting premium increases). Evidence alone that another vehicle caused the accident will not prevent abuse or fraud. Applying a reasonable and sufficient excess for material damages could eliminate the risk of fraud in the majority of cases. Considering the Commission's requirements – personal injuries suffered as a result of the same accident and full evidence that the damage was caused by another vehicle – compensation of material damages involving a reasonable and sufficient excess would be acceptable. The scope and amount of the excess should be determined in view of the objective to eliminate fraud.
If the vehicle had false number plates or number-plates belonging to another vehicle, the same cover should be provided as if the vehicle had not had any insurance cover.
The integration of the contents of the four Motor Insurance Directives into a single directive will be a useful step which will increase transparency. At the same time, as suggested above, it should be considered whether issues of registration, taxation and insurance regarding long-term stays in foreign countries should be comprehensively regulated in a separate directive.
15. Further suggestions for improvement
In addition to the regulations suggested by the Commission, there is a need for further improvement regarding the settlement of claims arising from accidents abroad. In such accidents, the lawyers' fees incurred by the victim should be covered by the responsible party's motor insurance. In view of the complex claims settlement mechanisms provided in the Fourth Motor Insurance Directive and the intricate interaction between the legal systems of two different countries, accident victims have an absolute need for competent assistance from a lawyer. Lawyer's fees incurred by a victim after an accident abroad must therefore, much more so than after an accident at home, be seen as a direct consequence of the accident, and should be paid by the responsible party's motor insurance which settles the accident claim.