European Commission Proposes Motor Insurance Reforms

The European Commission has proposed a series of proposals to strengthen European Union rules on motor insurance including one to assure that victims of accidents receive full compensation even when an insurer is insolvent.

The revamped rules also seek to ensure that those who have a previous claims history in another EU member state are treated equally to domestic policyholders, and potentially benefit from better insurance conditions.

The proposal to amend the Motor Insurance Directive will also make it easier for authorities to combat uninsured driving. It aligns the minimum levels of cover by motor insurance across the EU.

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Finally, it clarifies the scope of the Motor Insurance Directive following recent rulings of the Court of Justice of the European Union.

Valdis Dombrovskis, vice president responsible for Financial Stability, Financial Services and Capital Markets Union, called the changes “good news for those who move across the EU and for all of us as EU citizens.”

Jyrki Katainen, vice president responsible for Jobs, Growth, Investment and Competitiveness, said the directive favors a smooth functioning of the single market for motor insurance for drivers and potential victims of motor vehicle accidents. “We facilitate mobility across the EU through portability of the claims history,” Katainen said. “Furthermore, we improve access to compensation of victims of motor accidents in case of insolvency of an insurer and reinforce combat against uninsured driving.“

The commission is accepting comment for eight weeks from the May 24 date of releasing the proposal.

The commission is proposing the following changes:

  • Insolvency of an insurer: If the insurer of the vehicle responsible for an accident is insolvent, victims will be rapidly and fully compensated in their member state of residence. In cross-border situations, this will ensure that the ultimate financial responsibility is borne by the insurance sector of the home member state of the insurer, while allowing for quicker compensation to victims.
  • Claims history statements: Insurers will have to treat claims history statements issued by an insurer in a different member state equally to those issued domestically. This should ensure that citizens purchasing insurance abroad can benefit from more advantageous insurance premiums, on the same level as domestic consumers.
  • Uninsured driving: Member states’ powers to combat uninsured driving will be reinforced. The framers say this should help to tackle uninsured driving which increases premiums for honest motorists.
  • Minimum amounts of cover: EU citizens will benefit from the same level of minimum protection when travelling in the EU. The proposal sets out harmonised minimum protection levels for personal injury and material damage across the EU, as current minimum levels differ slightly between Member States.
  • Scope: To enhance legal certainty, the proposal incorporates recent case-law of the Court of Justice of the European Union into the Directive. In particular, the rules now clarify that accidents caused during the normal use of a vehicle for the purpose of transportation, including its use on private properties, are covered.

The first EU Directive on motor insurance was adopted in 1972, protecting victims of motor vehicle accidents and facilitating the free movement of motor vehicles between member states. Subsequently, five motor insurance directives progressively strengthened the protection of EU citizens. In 2009 those were consolidated into one EU Motor Insurance Directive.

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