Slide 1

EU Motor Insurance Directive 2009/103/EC

Eelke POSTEMA

European Commission

EESC, 24 June 2010

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EU Legal framework of motor insurance

• Constant evolution

• Green Card System

• Non-Life Insurance Directives

• Motor Insurance Directive 2009/103/EC

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EU Legal framework of motor insurance

Green Card system:

• Objective: to ensure that victims of road traffic accidents are not prejudiced when they sustain injury or damage caused by a motorist coming from another country rather than a motorist resident in their home country claims settlement system in case of cross-border elements

• Green Card issued by insurer certifies that the visiting motorist has at least the minimum compulsory third party insurance cover required by the law of the country visited - the country of the victim

• 44 Member States (mostly European) in 2010.

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EU Legal framework of motor insurance

EC Non-life Insurance Directives:

- First and Second Non-life Directives• Exclusion of motor insurance from general regime of free

provision of services and provisions on applicable law due to special character and importance for citizens

- Third Non-Life Directive• European single passport for insurance companies• Abolished control on premium prices: principle of freedom to

set rates in non-life insurance sector (as confirmed by ECJ in C-346/02 ‘Bonus Malus’)

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EU Legal framework of motor insurance

Motor Insurance Directive 2009/103/EC

- Objectives:

• Ensure free movement of vehicles throughout the EU

• Ensure high degree of protection and comparable treatment of victims of road traffic accidents

• Codification of previous Motor Insurance Directives repealed since 28 October 2009

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EU Legal framework of motor insurance

Motor Insurance Directives:

- 1st Motor Insurance Directive 72/166/EEC • Introduction of Compulsory Third Party Liability

Motor Insurance (TPL): liability for injuries to others (including passengers) and for damage to other persons' property resulting from the use of a vehicleComprehensive cover excluded from scope

• Abolition of checking of Green Cards at frontiers

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EU Legal framework of motor insurance

- 2nd Motor Insurance Directive 84/5/EEC

• Third party liability covers compulsorily both damage to property and personal injury

• Minimum amounts of cover (as amended by 5th Motor Insurance Directive)

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EU Legal framework of motor insurance

- 3rd Motor Insurance Directive 90/232/EEC

Third party liability • to cover entire Community territory on the basis of a

single premium and• to guarantee the cover required by the law of each

MS or the MS where the liable vehicle is based (if that cover is higher)

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EU Legal framework of motor insurance

- 4th Motor Insurance Directive 2000/26/EC

• More than 500,000 road traffic accidents involving vehicles from different Member States each year

• Established an efficient mechanism for quick settlement of claims where accidents take place outside the victims' Member State of residence ("visiting victims").

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EU Legal framework of motor insurance

- 5th Motor Insurance Directive 2005/14/EC

• Increase of minimum amounts of cover:

€1,000,000 per victim or €5,000,000 per claim (personal injury) and €1,000,000 per claim (property)

• Possibility for policyholders to ask their insurers for a claims record switching between insurers

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Social Aspects

- Gender Directive 2004/113/EC• Few Member States allow differentiation of pricing on

the basis of gender - Insurance cover for everybody- Differences in cover• The MID establishes minimum amounts of cover but

permits MSs to establish higher (or unlimited) amounts.

- Compensation levels differ in all MSs since the issues of liability and quantification of damages are national competences

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Establishment of rates

- Insurance premiums are amongst others determined based on:

• The experience of the driver• The power and the use of the car• The per capita GDP of the country where the cover

is obtained quantification of damages• Localisation of risk, i.e. where car is based

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Insurance premiums

• TPL is homogenous product (at least within national boundaries) tends to be a very price sensitive market

• Large share of direct sale by insurers and brokers tends to decrease premium levels

• Rather limited willingness of policyholders to switch provider (switching rates vary across Europe)

• Insurance liberalisation has resulted in lower insurance premiums and wider variety of products

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Challenges for consumers

• First party liability (fire, damage to own car, theft etcetera) validity across the EU

• Level of compensation awards

• Imported (dispatched) vehicles

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Thank you for your attention

• More information at

http://ec.europa.eu/internal_market/insurance/motor_en.htm

• Or contact:

eelke.postema@ec.europa.eu