EN Official Journal of the European Union CE 33/128

(2004/C 33 E/128)

WRITTEN QUESTION E-1522/03

by Armando Cossutta (GUE/NGL) to the Commission

(6 May 2003)

Subject: Unjustified increases in the cost of third-party motor insurance

Italy's competition ombudsman has recently published the results of an investigation into third-party motor insurance. This has brought to light the fact that, since 1994, the cost of insurance policies in Italy has doubled and in some cases increased five-fold. The eagerly-awaited liberalisation of the third-party motor insurance market in Italy (announced in 1994) has come to nothing, as the author of this question pointed out in an earlier written question dated 14 February 2000. In some parts of Italy, premiums are nowadays as much as 19 times as expensive as they were nine years ago and since last year they have increased in cost by 11,6 %, as against an EU average of 4,8 %.

1. Does the Commission not think that it should take action vis-à-vis the Italian Government with a view to promptly reversing such unjustified increases in the cost of insurance cover?

2. Does the Commission not consider that attempts to create an internal market in motor insurance have failed, given that most insurance companies refuse to insure drivers resident in a country other than the one in which they are based, even if that country is an EU Member State?

Answer given by Mr Bolkestein on behalf of the Commission

(9 July 2003)

The Commission is aware of the situation of increases in the cost of third party liability insurance in Italy. However, the figures available to the Commission do not show as large an increase in motor insurance premiums as those quoted by the Honourable Member. Since 1995 the average annual inflationadjusted increase in Italy has been 5,1 % compared to the Union average of 1,7 % (Source European Insurance Association — CEA).

It is true that motor insurance appears to be more expensive in Italy than the Union average but this reflects the frequency and costs of accidents in Italy compared to the Union average. However, in Italy the ratio of claims costs plus expenses to the insurers' income from premiums is similar to the Union average. In fact claims costs plus expenses exceed premium income in Italy.

There are several reasons for this high cost and frequency of accidents in Italy.

In particular the Commission would like to point out the following:

— the high cost of the personal damage: its incidence is higher than e.g. in Germany, France, Spain and Great Britain. As one example, the incidence of injuries caused by whiplash injury to the neck lesion (‘colpo di frusta’) represents 66 % of claims involving personal injuries in Italy as compared to 40 % in Germany, 35 % in the Netherlands, 15 % in Spain, 6 % in France, 5 % in Norway, and 4,8 % in Denmark;

— the high percentage of the claims involving personal injuries: in 1999 the percentage reached 17,3 % in Italy, as compared to 11 % in Germany, 10 % in France; 8,3 % in Great Britain, and 6 % in Spain;

— the high frequency of accidents caused by young people, especially on Saturday nights. This is a well known social problem in Italy;

— the relevant number of frauds: in order to fight this problem a data bank has recently been set up in the Istituto per la Vigilanza sulle Assicurazioni Private e di Interesse Collettivo (ISVAP). Its aim is to gather the relevant information on claims;

— the number of cars in circulation in relation to the number of inhabitants: the ratio is higher than in Germany, France and United Kingdom. In particular, in the year 2000 in Italy there were 789 cars per one thousand inhabitants, in Germany 614, in France 602 and in Great Britain 478;

— the number of cars in circulation in relation to the kilometres of the road. There are 137 vehicles in Italy against 110 in Germany, 40 in France, 76 in Great Britain.

To try to fight some of these factors, new legislative measures to establish guidelines for the reimbursements in case of personal injuries, as well as stricter provisions to limit the frauds in the insurance sector have been introduced in Italy towards the end of 2002.

The Commission would like to call the attention of the Honourable Member to a judgement delivered by the Court of Justice on 25 February 2003, in the case C-59/01 (Commission v. Italian Republic). In this judgement, the Court has confirmed the principle of tariff freedom in the non-life insurance sector, including the area of compulsory insurance such as insurance covering third-party liability arising from the use of motor vehicles. Furthermore, the Court notes that this principle ‘implies the prohibition of any system of prior or systematic notification or approval of the rates which an undertaking intends to use in its dealings with policy-holders. The only derogation from that principle allowed by Directive 92/49 (1) and admitted by the Court would concern prior notification and approval of “increases in premium rates” in the framework of a “general price-control system”’. The case was brought to the Court by the Commission under Article 226 of the EC Treaty and concerned measures adopted by the Italian Government in March 2000 to freeze compulsory motor insurance premiums for an initial period of one year.

Regarding the Honourable Member's second question, the Commission would like to point out that, according to the Insurance Directives, all European citizens are allowed to obtain motor insurance cover in a Member State other than their country of residence. In addition, insurance undertakings may also provide cross-border services if they follow the procedures set out in these Directives.

However, while the Union insurers are allowed to operate on a cross-border basis, they cannot be obliged to insure risks they are not interested in, in accordance with the principle of contractual freedom. Given the links of motor insurance with the territory in which the vehicle is normally used and the particularities of the Italian insurance market as explained above, it is not strange that many non-Italian insurance undertakings may prefer to operate in Italy through local branches or subsidiaries — rather than on a cross-border basis from another EU country.

(1) Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending Directives 73/239/EEC and 88/357/EEC (third non-life insurance Directive), OJ L 228, 11.8.1992.