European Commission proposes stronger motor vehicle insurance rules

'Good news' for people who move across the EU

Valdis Dombrovskis, vice president responsible for financial stability, financial services, and capital markets union, said, "With today's proposals, we are ensuring that victims of motor vehicle accidents will be better protected in the future. In addition, when people move across borders and purchase a motor insurance policy in another EU Member State, their claims history will be treated in the same way as those of domestic consumers. This is good news for those who move across the EU and for all of us as EU citizens."

Related: What's on the horizon for auto insurers?

Jyrki Katainen, vice president responsible for jobs, growth, investment, and competitiveness, said, "The Motor Insurance Directive underpins a smooth functioning of the single market for motor insurance for the benefit of drivers and potential victims of motor vehicle accidents. We facilitate mobility across the EU through portability of the claims history. 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 proposal to amend the Motor Insurance Directive also would make it easier for authorities to combat uninsured driving, according to the EC. It aligns the minimum levels of cover by motor insurance across the EU. Finally, it clarifies the scope of the Motor Insurance Directive following recent rulings of the Court of Justice of the European Union, according to the EC.

Proposed changes

The EC said that it is proposing the following changes to the current EU motor insurance rules, for the following reasons:

• 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 quick 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. This should help to tackle uninsured driving, which increases premiums for insured 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 harmonized 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, with the objectives of 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 (Directive 2009/103/EC).

In June 2016, the EC launched work to evaluate the Motor Insurance Directive, involving a public consultation between July and October 2017. The new amendments follow that evaluation.

Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at smeyerowitz@meyerowitzcommunications.com.