Opinion of the Economic and Social Committee on the 'Proposal for a European Parliament and Council Directive on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles and amending Directives 73/239/EEC and 92/49/EEC (Fourth Motor Insurance Directive)'
Date: 1998-03-25
Institutions: European Economic and Social Committee
Subjects: EC Directive, approximation of laws, insurance indemnity, motor vehicle insurance, third-party insurance

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them to sign electronically, with a personalized
national registration number and of course a cen-
tralized database;

— it is necessary to ensure mutual recognition of

certification authorities at a global level;

— as soon as possible, public authorities should be
in a position to provide and accept electronic
documentation; access could be provided through
terminals installed in public institutions, at least
initially;

— the confidentiality of correspondence is guaranteed
in virtually all constitutions of democratic countries,
and exceptions to this rule are established by law;
electronic communication should be protected in the
same way and in accordance with the same criteria.

Brussels, 25 March 1998.

The President

of the Economic and Social Committee

Tom JENKINS

Opinion of the Economic and Social Committee on the ‘Proposal for a European Parliament
and Council Directive on the approximation of the laws of the Member States relating to
insurance against civil liability in respect of the use of motor vehicles and amending Directives
73/239/EEC and 92/49/EEC (Fourth Motor Insurance Directive)’ (1)

(98/C 157/02)

On 4 November 1997 the Council decided to consult the Economic and Social Committee,
under Article 100A of the Treaty establishing the European Community, on the above-
mentioned proposal.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 4 March 1998. The rapporteur
was Mr Pelletier.

At its 353rd plenary session (meeting of 25 March 1998), the Economic and Social Committee
adopted the following opinion by 94 votes, with two abstentions.

1.

Introduction

Improving compensation for victims of traffic
1.1.
accidents in the European Union has been a major
concern of the EU’s lawmakers since the single insurance
market was set up.

This concern is all the more legitimate as it helps
1.2.
to facilitate the free movement of persons guaranteed
under the Treaty and make the single market a reality.

The fourth motor insurance directive comes at a
1.3.
time when EU citizens are becoming more mobile and
regularly spend short stays in Member States other than
their country of residence. These population movements,

(1) OJ C 343, 13.11.1995, p. 11.

which often coincide with holiday periods, are growing
steadily in volume and have a highly varying impact on
the different Member States. There is a clear distinction
between tourist ‘exporting’ and ‘importing’ countries
and the Member States through which such flows pass.

1.4.
Petitions received by the European Parliament
show that, statistically, there is a real risk that people
travelling through a foreign Member State may be the
victims of an accident, even though the number of
persons concerned remains small.

2. Antecedents

2.1.
The green card scheme set up at the end of the
1940s at the initiative of the UN’s transport committee
organized, under an inter-bureaux agreement, the repair

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of damage caused outside their country of registration
by vehicles insured in a European country.

2.2.
The EU Commission has been pursuing its goal
of improving compensation for victims of road accidents
in the EU since the first motor insurance directive of
1972 (72/166/EEC), which made civil liability insurance
compulsory in all EEC Member States at that time. The
second and third directives (84/5/EEC and 90/232/EEC)
further strengthened victim protection.

2.3.
The second directive of 30 December 1983, which
was inspired by the green card scheme, covered road
accidents in the victim’s country of residence that were
caused by vehicles registered and insured in that country
or in another Member State.

2.4.
The third directive of 14 May 1990, which
organized the free provision of car insurance services,
covered accidents in the victim’s country of residence
that were caused by a vehicle registered in the same state
but insured with an insurance company from another
Member State under the freedom to provide services.

In particular, it made it compulsory for all
2.4.1.
insurers operating in this market, whether established
or not, to belong to the green card bureau and to a
national guarantee fund.

2.5.
So, the car directives do not enable people who
are victims of a road accident outside their country of
residence to be covered adequately in practice.

2.6. Having identified this loophole, the EU Com-
mission submitted this question at the beginning of the
1990s to the two professional organizations most likely to
provide an answer: the European Insurance Committee
(EIC) and the Council of Bureaux.

2.7.
The Council of Bureaux, which runs the green
card scheme, prepared a ‘protection of visitors’ agree-
ment to cover such cases. But enactment proved impos-
sible because (i) not all the bureaux concerned would
give their consent and (ii) the extension of direct action
— which was the key to the whole system of applying
to a representative — could not be guaranteed under
optimal conditions of legal security.

protection throughout the EU and, above all, of allowing
accident victims in all Member States the right to take
direct action against the insurer covering the other party
against civil liability.

2.9.
Following a number of petitions from victims of
road accidents outside their country of residence, who
complained about delays in receiving compensation and
the slowness of procedures, the European Parliament
took up the matter in 1995. The legal committee
appointed as rapporteur Mr Willy Rothley, who was
behind the resolution adopted by the EP on 26 October
1995 under Article 138B of the Treaty.

2.10.
The EU Commission took account of the EP’s
request and drew up a draft directive based on the
following principles:

— victims to have a right of direct action against the
insurer covering the other party against civil liability;

— all insurance firms to appoint a representative for

settling claims from each EU Member State;

— setting-up of information centres responsible for
telling victims the names and addresses of the other
party and of the representative responsible for
settling claims in his/her country of residence;

— obligation for an insurer to offer compensation
within a fixed period together with penalties for
non-compliance;

— in the event of an unsatisfactory offer from the
insurer by the deadline laid down, or of a failure to
name a correspondent, setting-up of a procedure for
providing victims with compensation from an ad
hoc body in their own country of residence, with the
right for that body to claim back the sum from its
counterpart in the Member State where the accident
took place.

3. General comments

3.1.
The ESC is in favour of the proposed directive
as an essential stage in building a single market for the
benefit of consumers who may be faced with the
following difficulties if they are involved in an accident
abroad:

— language and communication problems;

— difficulties in identifying the person responsible for

damage and his/her insurer;

— differences in the conditions for admitting the
liability of the person causing an accident; and

— different laws on procedure and compensation in

different countries.

2.8. Noting this impossibility in such a sensitive area,
the EIC came out clearly in favour of a draft directive,
as the sole means of guaranteeing an equal level of

The ESC wants this text to be adopted as soon
3.2.
as possible and to be the subject of some degree of

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publicity from the EU Commission and from those all
those in the Member States who have a stake in
promoting such a measure: public authorities, insurers’
organizations, consumers’ associations,
the tourist
industry, etc.

3.8.
The ESC notes that this right to direct action
would only apply to victims satisfying the criteria set
out in Article 1, i.e. victims of accidents occurring in a
Member State other than their state of residence and
caused by a vehicle registered and insured in a Member
State other than their state of residence.

3.3. However, the ESC notes that some passages
could be worded more clearly and that questions
remain in professional circles over whether some of the
obligations in the proposal can be met within the time
limits set, especially the drawing-up of a register of
vehicles, civil liability insurers and claims representa-
tives.

Therefore the question of allowing a longer
3.4.
deadline for implementing this specific provision in the
proposal should be discussed because the setting-up of
such a register, which at present does not exist in this
form in several Member States, requires a reasonable
length of time in order to assemble the technical and
financial resources needed for it to operate properly.

Generally speaking, the question of the cost
3.5.
involved in implementing the proposal has been raised
by the interests concerned. The ESC would be interested
in knowing if the EU Commission has tried, in the
traditional assessment forms, to evaluate the economic
cost of this legislative initiative.

3.9.
The ESC wonders about the reasons behind this
restriction and feels that the present proposal should
have provided a good opportunity for making this
facility a universal right for the use of all victims of
accidents on EU territory.

Appointment of claims representatives

3.10.
The Member States must take the measures
necessary to ensure that approved class 10 insurance
firms appoint claims representatives in each Member
State. This new obligation incumbent upon firms is
designed to make things easier for victims. It is to be
added to the list of formalities that have to be fulfilled
before firms can be approved.

3.6.
It also seems obvious to the ESC that other stages
will have to be traversed once the proposal has been
adopted.

3.10.1.
The appointment of such a representative
thus becomes one of the conditions of eligibility for a
European passport.

3.6.1.
Even if the issue is a more general one, the
Commission ought to consider how to speed up and
facilitate the access of victims to the rules of evidence,
especially as regards the delivery and communicating of
local or national police reports.

It also seems desirable to eventually align the
3.6.2.
rules on the rights to compensation at European level,
even if current conditions do not seem ripe for real
convergence.

3.6.3.
The European Insurance Committee, for its
part, has helped the settlement of claims abroad by
preparing a model for a ‘European declaration’, which
is used in many Member States.

The right to direct action

3.7.
The inclusion of this right in the laws of all
the Member States undeniably represents an essential
objective in improving the situation of victims seeking
compensation. It would be something entirely new for
the United Kingdom and Ireland.

The ESC is pleased at the method adopted but
3.11.
wonders about the conditions under which it will be
implemented by the authorities. These will have to make
arrangements for requiring firms that have already been
approved to appoint a representative and for seeing that
the request files are completed. European insurers should
make the authorities aware of the importance of this
new task and press for the insertion of an additional
clause on this point in the protocol on the collaboration
of the insurance authorities in the countries of the
European Economic Area as modified in October 1997.

This new formality does not seem to represent
3.12.
too heavy a burden for firms if the list of natural or legal
persons able to carry out this task is open. The EU
Commission states in its commentary on Article 3 that
its intention is ‘to leave a large degree of latitude to
insurance undertakings’. So, it will be easy for firms to
use existing structures: subsidiaries, branches, agencies,
claims-settlement bureaux... or natural persons already
carrying out the duties of lawyer, agent, tax representa-
tive or service representative within the meaning of
Article 6 of Directive 90/618/EEC.

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3.13.
In addition, the appointment of such a represen-
tative obviously does not prevent the company from
contacting the victim or victims directly. Such flexibility,
which makes use of the claims representative just one
path of action among others, is particularly important
in that it respects the diversity of existing situations,
especially those where the victim has taken out a ‘legal
protection’ policy.

3.14.
The definition of the mandate linking the
representative to the company that appoints him must
show the same flexibility — this is the option in
Article 3.5 — so as not to force operators to change
their contractual relations with outside persons or their
organizational set-up on foreign markets.

Regarding the claims representative’s qualifi-
3.15.
cations,
it should be explicitly stated that he must
communicate in the official language or languages of
the victim’s Member State of residence, since language
difficulties are one of the main obstacles to the smooth
operation of compensation procedures.

Duty to offer compensation

guarantee greater efficiency both from the insurers’ and
the victims’ point of view.

3.20.
The ESC wonders whether agreement might
not be reached on inserting such a reference, which
could take the form of an addition at the end of the first
indent in Article 3(6) reading ‘and, in particular, the
state of consolidation of the victim’. But such a change
would be meaningless unless this reference is in general
use in the Member States.

3.21.
This concern for realism should also lead to the
remark that the request for compensation submitted by
the victim himself or one of his representatives must be
duly motivated and contain all the facts necessary for
an assessment to be made of personal injury and damage
to property.

Drawing-up of a register

The basic task of

3.22.
the information centre
described in Article 4.1 is to keep a ‘register of motor
vehicles registered in the territory of that state, insurance
undertakings providing civil liability cover for such
vehicles and the claims representatives...’ so as to
facilitate identification of the insurer necessary to start
the claims settlement procedure.

3.16.
Article 3.6 creates a duty to offer compensation
within a time limit of three months, with penalties ‘in
cases where liability is not contested and the damages
have been quantified’. This clause alone is absolutely
essential to the directive being effective and should make
any intervention by a compensation body as described
in Article 5 quite exceptional.

3.23.
The ESC cannot but support the setting-up of
such a structure to help accident victims, which in
addition should provide additional resources for com-
bating non-insurance; however, it wonders whether it is
feasible for such arrangements to be in place within the
time limits set by the proposal.

3.17.
This duty to offer compensation already exists
in France, since the entry into force of the Law of 5 July
1985. This scheme, which includes cash penalties where
no offer is made or an offer is unsatisfactory, has been
operating for more than ten years to the satisfaction of
both insurers and policyholders.

3.18.
Still with regard to the French experience, it has
been observed that the smooth operation of the duty to
offer compensation which is incumbent upon the insurer
of the person responsible for causing an accident depends
on a realistic evaluation being made of the procedures
for assessing personal injury and damage to property. It
is for this reason that reference is made in the Insurance
Code to the concept of consolidating the state of the
victim.

3.24.

Several difficulties must be mentioned here:

— in several Member States, insurers who provide civil
liability cover for car fleets do not have systematic
information on the registration number of each
vehicle;

— it is not currently possible in all Member States to
identify the insurer from the number plate; such a
system does exist in Germany or Austria, but in
France or Italy the link is between the number plate
and the policyholder;

— existing files which do more or less correspond to
the content of Article 4 are managed by one or more
entities (public authorities, professional associations,
independent bodies ...) which must be given the time
to arrange their partnership for setting up a single
‘counter’.

3.19.
This reference, which corresponds to a measure
used on other EU markets (Belgium, Spain, Portugal,
Italy ...) is worth examining carefully, as it could

3.25.
The ESC urges that, whatever happens, an
additional time limit of, for example, 30 months instead
of 24 should be granted. Such a time limit seems realistic

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for allowing all the Member States, in accordance with
national and EU rules on personal data protection, to
set up a single access point for assembling in a reliable
manner, and if possible in accordance with common
standards, all
this
‘address’ will be, according to the situation, either
created from scratch or developed from existing but
fragmentary registers.

this information, knowing that

3.26.
Such a time limit would also make it possible for
all concerned to make the most of national experiences in
the field of registration. Such a register has been
operating smoothly on the Spanish market since March
1996. Since this date insurers have been informing
their guarantee fund, apparently without any major
difficulties, of the registration numbers of the vehicles
covered by them, the names and addresses of the vehicles’
owners, the nature of the contract (annual, temporary,
etc.), its period of validity and the references relating to
the make of vehicle and the company’s registration
number with the monitoring authority.

Conditions for intervention by compensation bodies

3.27.
The proposal describes in detail the conditions
under which compensation bodies may compensate
victims if firms do not comply with Article 3.

3.27.1.
Article 5 is a safety net and, as the Commission
itself acknowledges in its explanatory memorandum,
‘will only be applied in very rare cases’.

3.28. Depending on the Member State, this compen-
sation body will probably be either the guarantee fund
or the green card bureau. Whatever happens, when the
directive is transposed into national law steps will have
to be taken to see that the Member States take the
measures necessary to achieve the two objectives of this
article:

— provide existing structures with the material and
financial resources to compensate victims, sometimes
to a very significant extent; and

— guarantee smooth settlement between compensation
bodies which, while being ‘counterparts’ according
to the terms of the explanatory memorandum, may
very well not be similar structures if, for instance, a
guarantee fund in the state of residence has to be
reimbursed by the green card bureau in the state
where the accident occurred.

3.29.
If two existing structures are in a position to
play this role, it could be useful to provide a list in an
appendix to the directive showing the compensation

bodies within the meaning of Article 5 in each Member
State. Such a list, which would have to be updated
regularly, could represent an element of legal security.

3.30.
The solution of an additional clause to existing
agreements between bureaux and guarantee funds will
also have to be considered to ensure that the two month
time limit covering the proceedings is respected.

3.30.1. Moreover, such a solution would make it
possible to organize bilateral exchanges of information
on the estimated value of damage, so as to avoid unsafe
assessments.

Article 6 covers cases where the insurer cannot
3.31.
be identified and provides for the payment of compen-
sation to the victim by the guarantee fund in his/her
state of residence. It would be useful to have some
details from the EU Commission on exactly what
situations it has in mind.

3.31.1.

For:

— either the information centre referred to in Article 4
has not done its job properly and has been unable,
for various reasons, to provide the name and address
of the civil liability insurer and its representative;

— or it has been impossible to identify the insurer for
objective reasons: ‘hit and run’, where the number
plate of the vehicle causing the accident has not been
noted, invalid contract, etc.

4. Specific comments

Article 1

Under the terms of this article the directive will
4.1.
only cover the territory of the European Union. The
ESC wonders whether it would not be feasible and
advisable to extend the directive’s scope to cover other
countries.

4.2.

Several situations should be borne in mind:

— The member countries of the European Economic
Area (Iceland, Norway, Liechtenstein) should be
covered by the EU directive after its adoption within
the framework of the agreements concluded between
the EU and the EEA.

— Switzerland, which has a frontier with several EU
Member States, poses a particular problem as it is
not a member of the EEA. Bilateral negotiations are
in progress between the EU and Swiss authorities
but these have recently been stalled over road transit
procedures. The ESC wonders what existing legal

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instruments could, in the interests of victim protec-
tion, extend the benefits of the measures provided
for in the directive to EU citizens who are victims of
a road accident on Swiss territory. A solution along
the lines of the multilateral guarantee convention
could be envisaged in the short term.

— The countries of central and eastern Europe also
have common frontiers with several Member States
and are recording increased road traffic flows. They
are due to become EU members and for some of
them the enlargement negotiations are to begin on
31 March 1998. They have joined the green card
scheme and are parties to the multilateral guarantee
agreement. One should therefore explore the agree-
ment option pending their membership of the EU.

— The situation of other non-EU countries is more
delicate from the legal principles angle. However,
one wonders about one case not covered by Article 1,
namely that, for instance, of an accident caused by
a vehicle not registered in the EU, driven by an
American owner covered by a guarantee of frontier
insurance issued by an insurer established in the EU.

4.2.1.
In fact under Article 1 registration cannot be
separated from insurance. But there may be situations
where these two inseparable conditions are not fulfilled.

The ESC also notes some big differences between
4.3.
registration systems in the EU regarding the authorities
responsible for issuing number plates, the information
required, the time limits for changing them ... and the
car directives have not touched on this subject.

4.3.1.
This issue should be put on the agenda in a
context characterized by the appearance of some cases
of wildcat free supplying of services in the car sector.

Article 2

The ESC is in favour of extending the direct right
4.4.
of action to all
injured parties within the meaning
of Article 1(2) of Directive 72/166/EEC. It therefore
suggests the following new wording for Article 2:

‘Each Member State shall ensure that any injured
party within the meaning of Article 1(2) of Directive
72/166/EEC enjoys a direct right of action against
the insurer covering the other party against civil
liability.’

Article 3

4.5.
It seems relevant to insert a reference to the
claims representative’s obligation to communicate with
victims in their own language. This detail could be
added at the end of Article 3(4) as follows:

‘He must communicate with the victim in the official
language or languages of the victim’s state of
residence.’

4.6.
Article 3(6) is essential to ensuring that the
obligation to offer victims compensation operates
smoothly; its wording should be amplified on three
points.

4.7.
First, provision should be made for cases where
the victim’s claim for compensation is exorbitantly high
and is therefore rejected by the insurer, who must then
give reasons for his refusal within a period of three
months.

The expression ‘offer of compensation’ doubt-
4.7.1.
less also covers cases where a claim is refused, but the
ESC thinks it would be wiser to use an explicit form of
wording like that in the second indent of Article 5(1),
where the expression ‘reply answering with reasons’ is
used.

4.7.2.
The following phrase could thus be inserted
after ‘offer of compensation’: ‘or give his exact reasons
for rejecting the claim for compensation’.

4.8.
A similar detail should be added with regard to
the form of the claim for compensation. In view of
the penalties involved in not replying or giving an
unsatisfactory reply, steps should be taken to see that a
reply is as complete and reasoned as possible.

It would therefore be useful to add the words
4.8.1.
‘giving reasons’ after ‘claim for compensation’ in the
first paragraph.

The wording of the second indent, which covers
4.9.
cases where the insurer is authorized to ‘provide an
appropriate reply’ instead of being ‘required to make an
offer’, must be clarified in the French version. The two
conditions mentioned may be either cumulative or
alternatives. The word ‘and’ would then have to be
replaced by ‘and/or’.

Article 4

4.10.
It could be relevant to insert a reference to the
guarantee fund in Article 4. The following expression
could be inserted at the end of the last sentence in

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Article 4(3): ‘together with the name and address of the
body referred to in Article 1(4) of Directive 84/5/EEC’.

4.11.
This article sets out in detail the content of the
information required to facilitate settlement of a claim
and lays down obligations in terms of exchanges between
Member States and insurance firms. It is regrettable that
no mention is made of an obligation for compensation
bodies in the different Member States to exchange such
information among themselves. The EU Commission
acknowledges in its explanatory statement that ‘cooper-
ation between information centres is essential if the
registration number of the vehicle and the name of the
insurer in the victim’s state of residence are to be made
available since this information is only recorded in the
state where the vehicle is registered’.

‘4. The Member States shall take the measures
necessary to facilitate exchanges of information
between information centres set up in accordance
with Article 4(1).’

Article 6

To remove any misunderstanding about the
4.12.
cases referred to in this article it might be useful to
replace the beginning of the first sentence, ‘If it is
impossible to identify the insurer’, by the following
wording, which is more precise:

‘When an information centre has not managed to
identify the insurer of a vehicle registered on its
territory ...’.

Article 7

4.11.1.
The ESC thinks it would be useful to refer
explicitly to such cooperation in Article 4. It proposes
that the following be inserted in the form of a new
Article 4(4):

4.13.
In view of the practical difficulties of setting up
the register described in Article 4 the ESC recommends
that the time limit envisaged in Article 7(1) be extended
from 24 to 30 months.

Brussels, 25 March 1998.

The President

of the Economic and Social Committee

Tom JENKINS