(2000/C 27 E/010) WRITTEN QUESTION E-2984/98
by John McCartin (PPE) to the Commission
(8 October 1998)
Subject: Derogations in motor insurance in Ireland
Will the Commission state whether the Irish market for motor vehicle insurance is affected by any
derogations from EU competition policy or other legislation and can the Commission state when suchderogations come to an end?
Joint supplementary answer
to Written Questions E-2983/98 and E-2984/98
given by Mr Monti on behalf of the Commission
(5 August 1999)
Further to its answer of 4 December 1998 (
1), the Commission has now obtained the following
information.
Motor-vehicle insurance is covered by the third non-life insurance Directive, Council Directive 92/49/EEC
of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to directinsurance other than life assurance and amending 73/239/EEC and 88/357/EEC (
2) (class 10: third-party
liability), which introduced a single system whereby authorisation, once obtained from the competentauthorities of the home Member State, permits an undertaking to carry on business throughout the entire
Community, under either the right of establishment or the freedom to provide services. The objective of
this system (introduced by Articles 4 and 5 of Directive 92/49/EEC), is to increase competition in nationalmarkets so that consumers can choose the insurance product which suits them best and the insurer theyprefer, irrespective of the companys home Member State.
In practice, however, market realities sometimes prevent the development of a satisfactory level of
competition. The main problem lies in the differences in premiums set in the various Member States for
third-party liability class. This is not incompatible with Community law because both the criteria used by
insurance companies to set premiums and the number of claims submitted vary from Member State toMember State. Various factors influence the setting of premiums in each of the Member States and resultin sometimes considerable differences in price.
Firstly, differences between Member States in the level of compensation paid may influence the level of
premiums. The Commission is currently examining the problem with a view to proposing a suitable
solution and possibly submitting a proposal for a directive adjusting the minimum compensation per type
of claim in the third-party liability class, as set out in the second car insurance Directive, Council Directive84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating toinsurance against civil liability in respect of the use of motor vehicles (
3). However, this Directive contains
no binding stipulations about the amounts to be paid or the procedures to be followed by the MemberStates. The latter may set higher or lower amounts, provided that these are no lower than the minimumamounts stipulated in the Directive. The fact that some Member States offer a higher level of protection orhave their own methods of assessing claims may lead  among other things  to higher premiums.
Secondly, the third-generation insurance Directives introduced a single prudential and financial control
system that is applicable by the Member State in which the insurance company is established. However,the criteria for assessing the financial health of firms are different in each Member State. It is theresponsibility of the competent authorities of the home Member State to monitor the financial health ofinsurance companies, including their state of solvency and the establishment of adequate technical reserves.Estimates of premiums and other financial resources are intended to cover a companys underwritingliabilities and solvency margin (Article 7 of Directive 92/49/EEC). The Directives also set out the minimumstandards for technical reserves. The Member State which grants the authorisation may lay down stricterrules for the insurance companies for which it is responsible (Article 9 of Directive 92/49/EEC).29.1.2000 EN C 27 E/9 Official Journal of the European Communities