WRITTEN QUESTION E-2719/97 by Susan Waddington (PSE) to the Commission (1 September 1997)

Subject: UK motor insurance - Green Cards

Many insurance companies in the United Kingdom continue to charge extra premiums for issuing 'Green Cards', place time limits on their use, and in some cases refuse to issue them for cars of 'European specification', i.e. left-hand drive.

Such practices continue to hamper the freedom of movement of UK nationals in the single market.

Does the Commission share this view? Are such practices legal under European law and what action will the Commission be taking to remove them?

Answer given by Mr Monti on behalf of the Commission (8 October 1997)

Regarding the granting of green cards and insurance certificates, under the terms of Article 2 of Directive 90/232/EEC on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles ((OJ L 129, 19.5.1990. )), all Member States are obliged to ensure that all compulsory insurance policies against motor vehicle liability (i.e. the green card) cover the entire Community on the basis of a single premium. This means that Community insurance companies are not allowed to charge extra for green cards. 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 the insurer charging an additional premium.

Granting green cards in the United Kingdom after the adoption of the third motor insurance Directive has already been the subject of several discussions in the past between the Commission and the British authorities. More specially, the Department of transport position on this matter is that (i) under Community requirement a British insurance certificate is valid in all other Member States, but only provides third party cover; (ii) it is not therefore necessary to have a green card when driving within the Community, as this too only provides evidence that its holder has third party cover; (iii) insurers nevertheless recommend that drivers carry a green card, as it has been an internationally recognised document for some 40 years; (i) drivers who want the full (i.e. comprehensive) cover of their British policy need to request an extension of cover from their insurer, who may charge an additional premium. This extension of third party element of cover is unrelated to the green card.

According to the information available to the Commission, in the United Kingdom, additional costs are charged by several companies for a 'foreign use extension' though without specifying to their clients the difference between this extension and the green card charges. In most cases there is a lack of information concerning the difference between granting a green card, which will be used in other Member States, and a foreign use extension of the contract. The insurance industry has recently prepared a leaflet to clarify this situation.

In fact, the third motor insurance Directive does not prevent insurers from charging an additional premium for extending the non-compulsory element of cover (i.e. over and above third party cover).

Nevertheless, the Commission is continuing discussions with the British authorities as well as with the Association of British insurers in order to settle some issues, for example the presentation of insurance documents and certain questions related to the form, colour or content of those documents, in order to render them easily recognisable abroad.

Finally, the Honourable Member raises a problem that many insurance companies in the United Kingdom refuse to issue green cards for left-hand drive cars. This implies that they refuse to conclude an insurance contract with drivers owning cars of this type. Insurers assess risks in the light of information at their disposal, including the probability of an event occurring and the seriousness of the risk. In this context, and in conformity with the principle of contractual freedom, insurers may reject offers from clients who represent a very high risk. In fact, cars not responding to British specifications could be considered a serious risk for British insurers. British insurers are free to develop their commercial policy in that direction and to refuse to conclude an insurance contract or levy additional charges on their clients owning left-hand drive cars.