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Response to the European Commission proposal for a directive on insurance against civil liability in respect of the use of motor vehicles


Publication date: 06 May 2003


INTRODUCTION

The AIT & FIA are the international federations that have in membership the majority of national motoring and touring organisations worldwide. Within the European Union our members represent the interests of more than 40 million motorists. Having represented our views to the European Commission prior to the publication of this draft proposal, we now welcome the opportunity to share with the European Parliament out main concerns regarding the proposed provisions of this draft Directive.

 

  • In our comments, we will restrict ourselves to the most important aspects of the proposal for the road user. We will not go into the technical regulatory aspects and details, although these are of course important for a directive that works well as a whole and for a good understanding of the parts thereof.
  • The most important topics from our point of view are:
    1. For which instances of injury or damage will the victim be compensated?
    2. What is the limit of cover?
    3. On what grounds will he be compensated?
  • We would emphasise that the framework for the present directive is that of insurance, linked to the possession and use of a motor vehicle. Our comments will be given per article based on the text dated 7-6-2002. We have not taken cognisance of any later amendments to the text.

  • Re art. 2 (2)
    First of all, it should be noted that the distinction between the types of damage/injury for which a limit is proposed leads to confusion, above all in some translations. For the sake of clarity, this relates to two types of damage/injury:
    1. Personal injury as a result of death or injury, which can consist of material or nonmaterial damage (2a)
    2. Damage to property, namely the material damage caused by damage to the vehicle concerned (2b)
  • Re art. 2 (2) sub a
    With regard to personal injury as a result of death or injury, we support unlimited cover. We have understood that reinsurance is possible. Given the fact that exceeding the limit of €1,000,000 only happens in extremely exceptional cases, we do not expect any noteworthy increases in premiums. There is therefore no reason to leave individual victims with a higher level of injury out in the cold.
  • Re art. 2 (2) sub b
    We believe that the limit of € 500,000 for compensation for damage to property is too low as far as large-scale traffic disasters with a single cause, for example accidents in tunnels, are concerned.
  • Re art. 2 (6)
    This provision contains a ban on limiting or excluding cover by the guarantee fund for damage to property in the case of ‘significant’ injury. What ‘significant’ is supposed to mean will be the cause of much discussion and will lead to considerable differences in interpretation among the various Members States. This adjective should therefore be left out in any case.
  • We do in fact support cover for damage to property by the guarantee fund, even where the victim has not suffered injury. In such a situation, we believe that a reasonable excess (a specific amount for own account) is acceptable.
  • Re art 4 (2)
    We are in principle in favour of the protection of pedestrians and cyclists on the road, indeed all weaker road users in the traffic environment,  but we believe that an EU Motor Insurance Directive is not the appropriate place to lay down regulations in respect of traffic liability. Where this is intended to amend the national liability laws of the various Member States, we are afraid that this will face insurmountable objections from a number of states.

In view of the ever increasing road traffic between Member States, we do however see a task for the European Union in respect of protecting weaker road users both in particular and in general with regard to the substantial differences in opportunities for compensation for traffic victims. This above all in respect of damage to property as a result of injury and death.

 

We believe that it is indeed possible to regulate this outside a Motor Insurance Directive without encroaching on the national regulations of the various Member States relating to liability and compensation for damage and without deviating from international private law currently in force, namely the lex. loci. delicti principle.

 

Our ideas are along the lines of statutory compulsory traffic insurance, linked to the statutory compulsory third-party motor insurance. This would in principle give all the victims of a traffic accident involving one or more vehicles the right to claim compensation for personal injury as a result of death or injury according to the regulations on liability and compensation of their own nationality. Drivers and passengers of motor vehicles would in principle submit a claim to the company insuring their own vehicle. Pedestrians and cyclists would claim from the insurance for the vehicle involved. If more than one vehicle was involved, then they would be able to choose which insurance company they wished to claim from. Where the victim himself acted with intention or conditional intention or with serious recklessness, he would be excluded from compensation. An important prerequisite for this system would be the explicit creation of a right of recourse for the relevant insurance company. This would give the company the right to recover the amount paid out from the liable person or his third-party insurance according to the liability and compensation law that currently applies within the European Union. According to the relevant international treaties. This is usually the law of the country in which the accident took place. Pedestrians and cyclists who would have to claim from this foreign insurance company would have to address such claims in their own country to the representative appointed pursuant to the 4th Motor Insurance Directive or the compensation body respectively. The major additional advantage of this system is that the representatives in the Member States would only have to act in a limited number of cases of injury or death and then could act according to the law of their own country. This would also apply to the compensation body, because also where the motor vehicles involved were not insured or not identified, the passengers could in principle claim from their own insurance company. If this was not covered, then the relevant guarantee fund (not the compensation body) would pay compensation according to the regulations of its own country; in this case also with the possibility of exercising a right of recourse. Compensation could be withheld from the uninsured owner/party in possession of the motor vehicle.

Overall calculations of car insurance premium increases as a result of the introduction of a no-fault system in the Netherlands (± € 100.00 to € 150.00) justify the conclusion that the premium increases resulting from this system would be limited in the majority of countries. All the more so since the risk of an accident in your own country is greater than it is abroad and because the average EU citizen usually spends a few weeks on the roads of another Member State.

  • Re art 4.4
    For the sake of clarity it must be indicated that this prohibition only applies in the case of loss resulting from death or injury. For the rest, we refer to our comments in respect of art. 2 (6), 2nd paragraph

General Comments:

We welcome in general the proposed draft Directive  it contains a number of measures (some long overdue in the case of levels of compensation ) that will improve the accident victims situation. Furthermore we support a number of measures currently considered by the Parliament that were developed in the third Trier Conference in November 2002:

  • Recognition of costs for legal, medical and technical expertise as damages to be recovered (i.e. out-of-court costs)
  • harmonisation of time limits
  • providing an additional applicable jurisdiction – the jurisdiction of the country of residence of the victim – providing the law is applied correctly.

In addition to the points where we propose amendment there are further changes to the proposal that should also be considered.

 

The Scope of the Directive should be extended so that it applies to accidents that occur in all places to where the general public have access, e.g. car parks or private land opened for public access as well the open roads.

 

Transfer of a vehicle from one member state to another: The European Parliament is urged to take up the current opportunity (where it is currently examining vehicle taxation as well as vehicle insurance)   to resolve in a coherent man the on-going problems faced by citizens when tackling the combined necessary administrative procedures of transferring a vehicle from one country to another.

 

Proposed Amendments of the AIT & FIA

EC Proposal COM(2002) 244  DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Directives 72/166/EEC, 84/5/EEC, 88/357/EEC, 90/232/EEC and Directive 2000/26/EC on insurance against civil liability in respect of the use of motor vehicles

 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular the first and third sentences of Article 47(2), Article 55 and Article 95(1) thereof,

Having regard to the proposal from the Commission[1],

Having regard to the opinion of the Economic and Social Committee[2],

Acting in accordance with the procedure laid down in Article 251 of the Treaty[3],

Whereas:

European Commission Proposal AIT & FIA Amendment

Recital 1 

  New Sentence

(1) Insurance against civil liability in respect of the use of motor vehicles (motor insurance) is of special importance for European citizens, whether they are policyholders or victims of an accident. It is also a major concern for insurance undertakings as it constitutes the bulk of non‑life insurance business in the Community. Motor insurance also has an impact on the free movement of persons and vehicles.

Insert new sentence
It should therefore be a key objective of Community action in the field of financial services to reinforce and consolidate the single insurance market in motor insurance.

In the interest of the free movement of persons and goods it must be possible to keep a motor vehicle in another Member State without the vehicle becoming temporarily uninsured owing to all kinds of procedures.


Justification:

The AIT & FIA have noted that many citizens face problems when transferring a motor vehicle long term from one Member state to another (with regard to settling all tax, insurance and registration issues smoothly).  During the time it takes to complete these administrative requirements (e.g. getting a new registration plate and insurance policy) vehicles should not become uninsured. A possible means of achieving this would be to extend that duration of the previous insurance policy for a certain amount of time as is already the case in Germany.

 

European Commission Proposal AIT & FIA Amendment

Recital 14 

Insurance cover for pedestrians and cyclists in the case of accidents involving a motor vehicle varies a great deal within the Community. In some Member States pedestrians and cyclists are not covered by the vehicle's insurance unless some form of driver liability can be established. In other Member States pedestrians and cyclists are covered by such insurance because they are usually the weakest party in any accident. In order to reduce such disparity, it should be ensured that pedestrians and cyclists are covered by the compulsory insurance of the vehicle involved in the accident, irrespective of whether the driver is at fault. This cover under the vehicle's compulsory motor insurance does not prejudge the civil liability of the pedestrian or cyclist or the level of awards for damages in a specific accident, under national legislation. Deleted
  New Recital
  Recognising the need to fill a potential gap in the liability insurance with regard to the personal injury of the owner, respectively the holder of a motor vehicle, incurred as a passenger of the motor vehicle. In addition, recognising the need to reduce as much as possible any negative disparities which  victims of traffic accidents in the various Member States currently experience with regard to personal injury and the need to guarantee compensation at a level at least equal to that according to the norms of his/her own country. There should be an additional insurance against traffic accidents linked to the Third Party Insurance.

Justification:

 The AIT & FIA fully support the objective of giving greater protection to more vulnerable road users in the traffic environment (and not just pedestrians and cyclists as proposed by the European Commission). However AIT & FIA believe that in the main, given the fundamental changes required in the law of some Member states (e.g. UK, Spain, Italy) where proof of fault is required not to mention the required changes to social security laws, the harmonisation of liability insurance law proposed of the European Commission is not viable and indeed would require changes to civil liability law. AIT & FIA also fear that this provision if included together with article 4(2) could greatly delay the legislative process of the Directive.  AIT &FIA see as a possible solution, an additional insurance cover (e.g. a European insurance against traffic accidents) to be added to the driver’s own car insurance that would cover personal injury of the vehicle’s driver and passengers as well and other vulnerable road users, suffered abroad and where the victim may make a claim according to the law of their own Member state (see article 4(2).

 

European Commission Proposal AIT & FIA Amendment

Recital 20 

To enhance the protection of any victim of motor vehicle accidents, the “reasoned offer” procedure provided for in Directive 2000/26/EC should be extended to any kind of motor vehicle accident. With a view to ensuring the proper functioning of this mechanism without duplicating the structure required by that Directive, the representative appointed by the insurance undertaking for the specific purposes of that Directive should also be allowed to take responsibility for handling any motor vehicle accident. That procedure is compatible with the system of Green Card Bureaux laid down in Directive 72/166/EEC for the settlement of claims in respect of accidents caused by vehicles normally based in the territory of another Member State.

To enhance the protection of any victim of motor vehicle accidents, the “reasoned offer and payment” of compensation procedure provided for in Directive 2000/26/EC should be enhanced to be  more efficient in cases where liability is not contested and the damages have been quantified..

 

Justification:

Within the framework of the 4th Motor insurance directive, the automobile clubs have noted that the response that the claims representative is obliged to make within the specified three-month deadline is very often insubstantial – noting that a claim for compensation is made and that more time is needed to obtain the necessary information reports.  This procedure needs to be made more efficient by obliging the claims representative to provide a more substantial response within the three month deadline: stating what is included in the compensation offer if the claim is uncontested and making payment within the stated deadline or providing detailed reasons where the compensation claim is contested.


HAVE ADOPTED THIS DIRECTIVE:

 

European Commission Proposal

AIT & FIA Amendment

Article 1 

  The following indent is added

Amendments to Directive 72/166/EEC

Directive 72/166/EEC is amended as follows:

 

In Article 1, paragraph 4 is amended as follows:

(a) The first indent is replaced by the following:

“‑         the territory of the State of which the vehicle bears a registration plate, irrespective of whether the plate is permanent or temporary; or”;

 

(b)The following indent is added:

“‑         in cases where vehicles do not bear any registration plate or bear a registration plate which does not correspond or no longer corresponds to the vehicle and have been involved in an accident, the territory of the State in which the accident took place, for the purpose of settling the claim as provided for in the first indent of Article 2(2);”.

New indent

Amendments to Directive 72/166/EEC

Directive 72/166/EEC is amended as follows:

 

Addition to  (1,4)

 

(c) Each Member State takes the necessary measures to ensure that:

- in case of storage of a motor vehicle in another Member State for more than three months, the motor vehicle shall remain insured until the owner, respectively the holder, of the motor vehicle has been able to insure it in another Member State for a maximum period of three months;

- a motor vehicle that is registered and insured in another Member State and is stored within its borders for a period longer than three months by the owner, respectively the holder, of the motor vehicle, can be insured there in the manner as referred to in Art. 3 (1) of Directive 72/66/EEC

 

Justification:
Many EU inhabitants experience problems when keeping their vehicles in  another Member State as and when the insurance in the citizen’s own Member State then and it is has not been possible to conclude the necessary insurance covern in the other Member State in due time.

 

European Commission Proposal AIT & FIA Amendment

Article 2(2) 

Amendments to Directive 84/5/EEC

Article 1 of Directive 84/5/EEC is replaced by the following:

“Article 1

2.         Without prejudice to any higher guarantees which Member States may lay down, each Member State shall require insurance to be compulsory at least in respect of the following amounts:

(a)        in the case of personal injury , Eur 1 000 000 per victim

(b)        in the case of damage to property, EUR 500 000 per claim, whatever the number of victims.

Amendments to Directive 84/5/EEC

Article 1 of Directive 84/5/EEC is replaced by the following:

“Article 1

2.         Without prejudice to any higher guarantees which Member States may lay down, each Member State shall require insurance to be compulsory at least in respect of the following amounts:

(a)        in the case of personal injury, the cover is unlimited

(b)        in the case of damage to property, EUR 500 000 per claim, whatever the number of victims and without limits.

 

Justification: 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 a 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 a European level.

 

European Commission Proposal AIT & FIA Amendment

Article 2(6) 

Member States may limit or exclude the payment of compensation by the body in the event of damage to property by an unidentified vehicle.

That option shall not apply where, as a result of the same accident, the victim has suffered significant personal injuries.

The conditions for the personal injuries to be considered significant shall be determined by each Member State's legislation.

Member States may limit or exclude the payment of compensation by the body in the event of damage to property by an unidentified vehicle.

That option shall not apply where, as a result of the same accident, the victim has suffered significant personal injuries.

The conditions for the personal injuries to be considered significant shall be determined by each Member State's legislation.

 

Justification:

The Commission’s aim to suppress Member states option to limit compensation to material damages in the case of accidents caused by unidentified vehicles is welcomed as a measure serving to protect accident victim. However, how “significant” will be interpreted by Member states will lead to considerable differences in the application of this measure.

 

European Commission Proposal AIT & FIA Amendment

Article 4 (2) 

  The following Article 1a and 1b is inserted:

Amendments to Directive 90/232/EEC

Directive 90/232/EEC is amended as follows:

 “Article 1a” DELETED

NEW (Article 1a)

The insurance referred in Art. 3 (1) shall cover personal injuries suffered by the owner, respectively the holder, of a motor vehicle as a passenger as a consequence of an accident in which the motor vehicle is involved.

NEW “Article 1b

Member States shall ensure that linked to the insurance referred to in Article 3 (1) of Directive 72/166/EEC, the owner, respectively the holder, of a motor vehicle can and is obliged to take out insurance against traffic accidents in other Member States. This accident insurance must at least cover the personal injury incurred by the driver and passengers as well as any involved cyclists and pedestrians following an accident insofar as they can claim damages therefore under the liability laws and the compensation norms of the member state in which they hold domicile.

Cyclists and pedestrians may choose as to which insurer they claim to if multiple motor vehicles are involved in the accident.

The insurer who has paid the personal damages of the victim and any next of kin pursuant to the regulation in this article, shall by subrogation take over the rights this person has with respect to the person who is liable for the damage caused by the accident or his/her Third Party Insurance.

In this article, personal damage is taken to mean damages resulting from injury or death including reasonable costs of legal aid for determining the duty to compensate and the extent of the damages. The level of the traffic accident insurance referred to in this article any premium discount and that of the Third Party Insurance may not be made dependent on payment made under this regulation.

 

Justification:

The proposed text of art. 1a should be deleted, as it impinges upon the various legal systems of the Member States pertaining to traffic liability. A Motor Insurance Directive is not the right framework for this. In its stead a new article 1a and 1b is proposed.

 

Re. 1a  This addition is deemed necessary to ensure that the owner/holder of the motor vehicle does not remain excluded from the liability insurance of the driver of the motor vehicle.

 

Re. 1b Traffic liability law and the norms for compensation for damages (as concerns items of damage and the level of compensation) differ considerably in Europe. In addition, levels of prosperity and social insurance schemes also differ enormously. This, for instance, may cause a victim from Member State a to receive far lower compensation (or no compensation at all) for an accident in Member State b than in his own Member State, while a victim from country b may receive a far higher compensation for an accident in another country than in his own country. These differences are at variance with the sense of justice and obstruct the free movement of persons and goods. For this reason, the AIT/FIA proposes a compulsory traffic accident insurance for accidents in another

 

Member State than that of the victim, linked to the Third Party Insurance, thus achieving:
1. That victims within the EU are provided compensation to a level at least in accordance with the norms of their own country, and for the main part via their own Motor Insurance, following familiar regulation;
2. That the various liability systems and the applicable rules of international private law are upheld and remain applicable to the recourse actions of insurers and to the claims of the victims relating to damages which are not eligible for compensation according to the norms of the own country;
3. That far fewer claims need to be handled via the representative pursuant to the 4th MID, and that any claims by pedestrians and cyclists to a foreign insurers can be handled by a representative according to the law of the country of the victim; this also applies to the claims that the damage compensating body must handle pursuant to the 4th MID. It can further be commented that the additional premium that is required for said traffic accident insurance will remain highly limited. The risk of damage abroad is considerably lower than in the own country, as the insured party will generally only be abroad a few weeks in the year. Additionally, in many cases payments made can be “reclaimed” by exercising the right of recourse.

 

We emphasize that said traffic accident insurance abroad only needs to cover personal injury.

 

European Commission Proposal AIT & FIA Amendment

Article 4(e) point 2 

  Insert 2(a)

Member States shall establish the procedure provided for in Article 4(6) of Directive 2000/26/EC for the settlement of claims arising from any accident caused by a vehicle covered by insurance as referred in Article 3(1) of Directive 72/166/EEC.

(2) a

Member states shall ensure that under this  procedure, that within the state three months,  the insurance undertaking of the person who caused the accident or his claims representative is required to make a reasoned offer of compensation  and payment in cases where liability is not contested an the damages have been quantified.

 

Where the claim is contested,  the accident victim should received a reasoned and substantive reply  to the points made in the claim.


Justification: See Justification for recital 20

 

For further information please contact:
AIT & FIA Brussels Office
Rue d'Arlon 50
B-1000 Brussels
Tel: 0032-2 282 0815  Fax: 0032-2-280 0744


[1]  OJ C

[2]  OJ C

[3]  OJ C


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