WRITTEN QUESTION E-1120/98

by Richard Howitt (PSE) to the Commission

(8 April 1998)

Subject: Non-acceptance of validity of French car insurance in the UK: ref: 980024A

Can the Commission explain why a full car insurance purchased in France was not accepted by UK Vehicle Registration Officers when my constituent Mr Moisdon, came to renew his vehicle road tax? If insurance cover, other than for cars, applies throughout the EU, can the Commission indicate how this anomaly exists? Is this not an example of obstruction to the single market in insurance services? Does the Commission plan any action in this respect?

Answer given by Mr Monti on behalf of the Commission

(12 June 1998)

In respect of compulsory cover under motor insurance policies, Article 3.1 of Directive 72/166/EEC (first motor insurance directive), as amplified by Article 1 of Directive 84/5/EEC (second motor insurance directive) and Article 1 of Directive 90/232/EEC (third motor insurance directive) provides for the introduction of obligatory civil liability insurance against property damage and physical injury to passengers in respect of vehicles normally based in a Member State's territory. This is an obligatory cover throughout the Community. The extent of the liability relates to either the financial limits of cover (this must be within the limits set out in Article 2.2 of Directive 84/5/EEC) or items covered in addition to property damage and injury to passengers. Comprehensive cover remains outside the scope of application of the motor insurance directives.

Community single market legislation provides for recognition of insurance cover purchased in another Member State through the "green card" system. As regards compulsory insurance policies against motor vehicle liability, Member States are obliged to ensure that such policies cover the entire Community on the basis of a single premium. The third motor insurance directive requires that a policy automatically provides either the level of third party cover required by law in the Member State visited or the level of third party cover enjoyed in the "home" Member State if this is greater without an additional premium being charged by the insurer. United Kingdom vehicle registration officers are obliged to recognize insurance certificates which have been issued and are valid in other Member States, but only as far as third party cover is concerned. Regarding the full (i.e. comprehensive) cover obtained in another Member State (e.g. France) it depends on the contract signed by the French insurer whether the same extent of comprehensive cover (amounts of compensation and insurance classes) provided in France is also provided in other Member States. In this case the Honourable Member's constituent might need to request an extension of cover from his French insurer, who may charge an additional premium.

Moreover, under Community insurance law the Member State of the registration of a vehicle also determines the localisation of the risk. If the insured wishes to move with his vehicle from one Member State to another and have his vehicle registered in the Member State of his new residence - which is apparently the case here - the localisation of the risk changes. In this context, vehicles registered in the United Kingdom should be covered by a third party liability insurance contract concluded with an insurer having acquired an authorisation to exercise its activity awarded by the control authorities of this Member State of origin - in the present case in the United Kingdom - and having become a member of the local guarantee fund and the local motor insurer's bureau. The insurer does not have to be established in the Member State where the vehicle is registered. On the contrary, the insured can choose any insurer - or continue with his former insurer - provided that he has obtained an authorisation to exercise his activity in any of the Member States, if that insurer agrees to insure that vehicle on a provision of services basis.

In the present case, the British control authorities have the right to reject any insurance certificates, issued by companies domiciled in other Member States and covering vehicles previously registered in other Member States, but wishing to apply for a British registration plate, (i.e. become British risks), if the companies have not met all necessary legal conditions in order to obtain a valid authorisation to exercise their activity under British law. On the other hand, if those companies have accomplished all necessary conditions under British law, then the refusal by the British authorities of insurance certificates issued by those companies could be considered as a measure contrary to Article 59 EC Treaty (free provision of services). The Commission would need more information from the citizens who have contacted the Honourable Member regarding this last subject.