# CE2004078EN.01040501.xml

| 27.3.2004 | EN | Official Journal of the European Union | CE 78/405 |
| --- | --- | --- | --- |

27.3.2004

EN

Official Journal of the European Union

CE 78/405

---

(2004/C 78 E/0427)

WRITTEN QUESTION E-2407/03

by Bart Staes (Verts/ALE) to the Commission

(21 July 2003)

Subject:   Motor-vehicle insurance

Subject:

On 19 June 2003, the Belgian Insurance Ombudsman presented her annual report. The report states that there were so many wholesale cancellations, which, in only very few cases, were obviously justified, that the question arises whether an insurance company, which initially entices clients only to abandon them subsequently without giving the slightest reason for so doing, is not abusing the law. After all, insurers may cancel a policy every twelve months without further ado, provided that it gives due notice to the policy-holder.

The information set out in the Ombudsman's report shows that insurers are allowed to refuse to give to clients who are involved in a liability claim any cover other than the obligatory third-party liability insurance, even if the person involved was not at fault or if no third party was involved.

Does the Commission share my view that it should not be possible for insurers without further ado to refuse cover for certain risks to drivers involved in an accident where they were not themselves at fault or where no third party was involved, if only on the grounds that it is fairly pointless to insure oneself against something if large numbers of insurers refuse to pay out claims for damages made in good faith? If not, why not? If so, what measures will it take on behalf of the consumers involved?

Is it indeed an abuse of the law for insurers to entice clients and subsequently to abandon them without reason? If, so what measures will the Commission take? If not, what arguments can the Commission put forward to allay the suspicions of the Belgian Insurance Ombudsman?

Joint answer

to Written Questions E-2405/03, E-2406/03 and E-2407/03

given by Mr Bolkestein on behalf of the Commission

(4 September 2003)

(4 September 2003)

The Commission is following with some concern the situation in a number of Member States where increases in the cost of compulsory insurance may have the perverse effect of impeding or actually preventing freedom of choice for individuals (and, in particular, young people and the elderly) between the different means of transport available to them (private vehicle or public transport). It would refer the Honourable Member to its answers to Written Questions Nos 592/02 (1) and 1522/03 (2) by Marianne Thyssen and Armando Cossutta respectively.

1

2

However, the Commission remains attached to the principle of freedom to set premiums advocated by the Third Insurance Directives, particularly in the case of civil liability motor-vehicle insurance despite the fact that the compulsory nature of such insurance has been recently confirmed by the Court of Justice (see in particular the ruling of 25 February 2003 (3)). This is because competitive pressures benefit consumers.

3

The Honourable Member mentions the spirit of Article 21 of the Charter of Fundamental Rights of the European Union and of Article II-21 of the Draft Treaty establishing a European Constitution. The Commission would point out that differential treatment does not necessarily constitute discrimination based on the age of the policyholder where such treatment can be justified by objective factors reflecting objective underlying circumstances when it comes to determining the level of the policyholder's premiums. For instance, it must be borne in mind that companies set their premiums ‘inter alia’ on the basis of average claims frequency. Depending on their assessment of the risk, they are free to decide to adjust their offer or even to leave certain domestic niche markets to competitors. In any event, the Commission has a duty to point out that segmentation is in no way a result of European regulation but is instead a technique for setting premiums that more closely reflect the situation on each local market: different premiums are applied to individuals in respect of whom different costs are incurred. To that extent, segmentation would seem to be consistent with Community law, provided that it corresponds to different customer categories whose risks can be assessed by appropriate and objective statistical analyses.

In his Written Question E-2406/03, the Honourable Member raises the problem of a policyholder's history of making claims. The Commission would remind him that the abandonment of the uniform compulsory no-claims bonus system in Belgium is the direct result of the action that it took back in 1996 and that led ultimately in 2002 (4) to the introduction of measures separating the scale from the premium. Companies will thus have greater freedom to treat policyholders differently on the basis of their actual claims history and to offer their customers more competitive premiums.

4

The Honourable Member also refers in that question to the measures inserted into Belgian legislation by Article 2 of the Law of 2 August 2002 (‘Loi Monfils’ (5)). This provision allows any individual to contact the Rating Office if at least three insurance companies contacted by him have refused to provide cover. It should be pointed out that the proposal for a premium exceeding a threshold determined by multiplying by five the lowest premium of the insurance company's scale for a motor vehicle identical to that for which cover is being sought is regarded as a refusal under that provision. It is clear that, in accordance with the European regulatory framework, the national authorities have sole responsibility for introducing the appropriate mechanisms to ensure that policyholders comply with the requirement to take out compulsory civil liability insurance. Accordingly, the Commission could not comment on measures such as these or such as that mentioned in Written Question No E-2407/03 that fall within the remit of the Belgian institutions responsible for the monitoring and commercial policy of companies. It does though warmly welcome the measure to combat the failure to take out insurance that is contained in those provisions and is, in its view, perfectly compatible with the objective pursued by the civil liability motor-vehicle insurance directives.

5

For its part, the Commission has taken the initiative of proposing as part of the modernisation of the civil liability motor-vehicle insurance directives a number of measures aimed at making it easier for individuals wishing to change their insurance company (requirement on the insurer to issue a claims history certificate) so as to benefit from the best policy conditions available at any time (6). In this connection, it would, of course, welcome any transparency measure that would reduce the information imbalance existing between the insurer and the policyholder.

6

The Commission is also convinced that the way to reduce the cost of civil liability motor-vehicle insurance inevitably involves improvements in road safety: in 2002 road accidents caused the death of 41 761 people (of whom 1 470 in Belgium) and injured more than 1,7 million people in the European Union. Between 1991 and 2001 16 918 people were killed on Belgian roads (7). To put a stop to this, the European Union is conducting a very ambitious road safety campaign that will also bring financial benefits for policyholders since any decline in the accident rate is bound to be reflected in the level of the premium.

7

Lastly, as for the Belgian Government's plan for the period of validity of insurance policies covering the civil motor-vehicle liability of young drivers mentioned in Written Question E-2405/03, it is not for the Commission to comment on hypothetical draft national rules.

---

(1)  OJ C 301 E, 5.12.2002.

1

(2)  OJ C 33 E, 6.2.2004, p. 128.

2

(3)  Case C-59/01 Commission v Italian Republic, and in particular paragraph 29.

3

(4)  With the adoption of the Royal Decree of 16 January 2002 amending the Royal Decree of 22 February 1991 laying down general rules for the control of insurance companies and the Royal Decree of 14 December 1992 on the standard compulsory liability insurance contract for motor vehicles, published in the Belgian Gazette of 14 February 2002.

4

(5)  Published in the Belgian Gazette of 30 August 2002.

5

(6)  COM(2002) 244 final.

6

(7)  According to CARE, the Community Road Accident Database, http://europa.eu.int/comm/transport/home/care/index_en.htm

7

---