CELEX: 51988PC0791
Language: en
Date: 1988-12-19
Title: PROPOSAL FOR A COUNCIL DIRECTIVE AMENDING, PARTICULARLY AS REGARDS MOTOR VEHICLE LIABILITY INSURANCE, FIRST COUNCIL DIRECTIVE 73/239/EEC, AND SECOND COUNCIL DIRECTIVE 88/357/EEC ON THE COORDINATION OF LAWS, REGULATIONS AND ADMINISTRATIVE PROVISIONS RELATING TO DIRECT INSURANCE OTHER THAN LIFE ASSURANCE AND LAYING DOWN PROVISIONS TO FACILITATE THE EFFECTIVE EXERCISE OF FREEDOM TO PROVIDE SERVICES AND AMENDING DIRECTIVE 73/239/EEC (presented by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (88) 791
Vol. 1988/0260
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                                     COM(88)791     final - SYN 179
                                                                      Brussels , 19 December 1988
  PROPOSAL FOR A COUNCIL DIRECTIVE AMENDING , PARTICULARLY AS REGARDS
      MOTOR VEHICLE LIABILITY INSURANCE , FIRST COUNCIL DIRECTIVE
      73 / 239/EEC , AND SECOND COUNCIL DIRECTIVE 88/357/EEC ON THE
   COORDINATION OF LAWS , REGULATIONS AND ADMINISTRATIVE PROVISIONS
  RELATING TO DIRECT INSURANCE OTHER THAN LIFE ASSURANCE AND LAYING
  DOWN PROVISIONS TO FACILITATE THE EFFECTIVE EXERCISE OF FREEDOM TO
            PROVIDE SERVICES AND AMENDING DIRECTIVE 73 / 239/EEC
                        ( presented by the Commission )
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                           EXPLANATORY MEMORANDUM
I.   Introduction and backaround
     The primary object        of this proposal for a directive is to
     include third party motor insurance ( also referred to as motor
     vehicle liability insurance ) within the framework established
     by the Second Council Directive 88/357/EEC on the coordination
     of laws , regulations and administrative provisions relating to
     direct insurance other than life assurance and laying down
     provisions to facilitate the effective exercise of freedom to
                                                            1
     provide services and amending Directive 73 / 239/EEC . Directive
     88/357 /EEC , hereinafter referred to as the Second Directive ,
     was adopted on 22 June 1988 and will enter into force in July
     1990 .
     When the Second Directive was adopted the Commission recorded
     its intention to present a specific new proposal ,          covering
     freedom to provide services in third party motor insurance ,      as
     soon as possible .
     This same proposal is also envisaged in the programme annexed
     to the White Paper on completing the internal market .           The
     timetable , as amended , envisages that the Commission will adopt
     and present to the Council a proposal on freedom to provide
     services in motor liability insurance by the end of 1988 .
     The Second Directive amended certain provisions of the First
     Non-Life       Insurance    Establishment    Directive   ( Directive
                                            2
     73 / 239 /EEC - the "First Directive ") .
     The present proposal for a directive , which covers not only
     compulsory third party motor insurance but also optional motor
     insurance ( essentially damage to or theft of the insured 's own
     vehicle ), amends certain provisions of both the First and
     Second Directives .
 1 OJ No L 172 , 4.7.1988 , p. 1 .
 2
   OJ No L 228 , 16.8.1973 , p. 3 .
 ---pagebreak---                           - 2 -
The content of the Second Directive itself reflects closely the
judgments handed down by the Court of Justice in four insurance
cases on A December 1986 .     Those judgments ended a long period
of conflict concerning the whole question of freedom to provide
insurance services .
Briefly , the Court had said the following :
- a requirement of establishment , in the context of the free
   cross-frontier provision of services , is the very negation of
   this Treaty-given freedom and is therefore contrary to
   Community law ;
- but insurance is in general a sensitive area ,        where the need
   for protection of the policyholder or insured person is such
   that , in the present state of Community law ( that is , until we
   have further , more detailed , harmonization ), the State where
   insurance services are being provided ( that is , where the
   risk to be covered is situated ) may impose on the insurer a
   requirement to be authorized       ;  this authorization may be
   linked to a requirement to respect a large part of that
   State 's  supervisory   rules ,    including   those   relating  to
   techical   reserves   and   the    general   and   special   policy
   conditions ;
- but again ,   this need for protection is not the same in every
   case and there may be ^ as^s where it is not needed at all ;
   where this is so ,    thore is no need for the authorization
   requirement and all that gees with it .
Following the Court 's judgments work resumed on the proposal
for a non-life insurance freedom of services directive .           The
result is the Second Directi”? of 22 June 1988 .
The Second Directive provides for two separate regimes .           For
" large risks", regulation         carried out for the most part by
the State where the insure is established ("home country
                                                                       3
 ---pagebreak---                          - 3 -
control "), whereas for "mass risks" ( the smaller policyholders )
the State where the risk is situated may , subject to certain
conditions , apply the authorization requirement and associated
rather burdensome controls which the Court had envisaged .
From 1 January 1993 onwards , " large risks" will be :
- transport risks ( without thresholds ) ;
   credit and suretyship risks ( without thresholds ,  but subject
   to the conditions that the policyholder is carrying on a
   commercial activity ) ;
- fire and general property damage , general civil liability and
   pecuniary loss , to the extent that the policyholder or the
   group of companies of which the policyholder is a member
   fulfils two out of the three following conditions :
   - 250 employées
   - turnover of 12.8 million ECU
   - balance sheet total of 6.4 million ECU .
During a transitional period running from the summer of 1990 to
31   December  1992 these thresholds will be roughly doubled .
Furthermore , a much more extended transition , with various
progressive stages , is provided for Spain , Portugal , Greece and
Ireland .
Although the Court judgments of 4 December 1986 did not concern
compulsory insurances the Second Directive does itself cover
such insurances under the special provisions laid down in its
Article 8 . In particular it is stipulated in Article 8(2 ) that
"When a Member State imposes an obligation to take out
insurance , the contract shall not satisfy that obligation
unless it is in accordance with the specific provisions
relating to that insurance laid down by that Member State ."
The present proposal for a directive does not seek to amend the
above provision .
 ---pagebreak---                              - 4 -
    The specific insurance class No 10 ,  covering third party motor
    insurance , is however excluded from the scope of Title III of
    the Second Directive ( provisions peculiar to the freedom to
    provide services ) except for that part of class 10 relating
    solely to carrier 's liability .
    In view of the fact that in Italy motorboats are treated in the
    same way as motor vehicles as regards compulsory liability
    insurance , class 12 ( marine liability ) was also excluded from
    the scope of Title III of the Second Directive as regards
    Italian motorboat risks .
    The inclusion of Class 10 in the freedom of services provisions
    of   the Second Directive will   also remove   the need   for the
    Italian motorboat exclusion .
    The reason for the exclusion of third party motor insurance ,
    which is compulsory in all the Member States by virtue of the
    first motor insurance Directive 72/ 166 /EEC ,  is that there are
    special considerations peculiar      to   this  insurance   class ,
    justifying a separate proposal .
    These relate :
    1 . to the operation of the national guarantee funds ;
    2 . to the operation of the green card system , and in particular
        of the Supplementary Agreement between the national motor
        insurers' bureaux ;
    3 . to the need to safeguard the interests of accident victims in
        their position as third party claimants .
    This proposal for a direci ivn deals with the above points , the
    solutions adopted being d Qsmibed in detail in the comments on
    the individual articles .
3
  OJ No L 228 , 16.8.1973 , p. 3 .
 ---pagebreak---                                 - 5 -
     Insurance class 3 , covering loss of or damage to motor and
     other land vehicles , is covered by Title III of the Second
     Directive ,   but the definition of large risks set out in Article
     5 of the Second Directive makes no reference to class 3 .       The
     present proposal remedies this .
     Most importantly ,       the proposal brings third party motor
     insurance ( class 10 ) within the scope of Title III of the Second
     Directive and at the same time draws the distinction between
     large risks and mass risks in this class .
      Finally and in general terms , this Directive aims , in conformity with
      Articles 100 A ( 3 ) of the Treaty , at ensuring a high level of protection
      for consumers in the field of motor insurance .
II . Comments on the individual articles
     Article 1
     This is a definitions article .        The definitions used are not
     new but are taken over from the Second Directive ( of 1988 ) and
      from the first and second motor insurance Directives      ( of 1973
     and 1984 respectively ).
     Article 2
     The purpose of this article is to provide for the possibility
     of treating risks in both class 10 ( motor vehicle liability )
     and class 3 ( damage to or loss of land motor vehicles or other
      land   vehicles )  as   large   risks within  the meaning   of  the
     definition inserted in Article 5 of the First Directive by
     Article 5 of the Second Directive .
     To that end ,    Article 2 of the new proposal adds classes 3 and
     10 to point ( d ) ( iii ) in Article 5 of the First Directive .
     The quantitative criteria for distinguishing large risks laid
     down therein and the transitional provisions provided for in
     Article 27 of the Second Directive will thus apply to classes 3
     and 1 0 .
                                                                                C
 ---pagebreak---                           - 6 -
Artide 3
By deleting the second and third indents in the second
paragraph of Article 12(2 ) of the Second Directive ,                this
article   cancels  the   exclusion    of   class   10  ( motor   vehicle
liability ) and class 12 ( as regards Italian motorboat risks )
from the freedom to provide services provisions laid down in
Title III of the Second Directive .
It will thus be possible for such risks to be covered by way of
the provision of services subject to the relevant provisions of
the Second Directive .
Article A
This article substitutes a new text for that of Article 22 ( 1 ) of
the Second Directive ,    the said provision being concerned with
the keeping of gross premium statistics for operations effected
by way of provision of services broken down by the Member State
where such services are provided and by group of insurance
classes .
The new text introduced by Article A of the proposal includes a
new group of classes       entitled motor     insurance ,    comprising
classes 3 ( damage to or loss of motor vehicles ),          7 ( goods in
transit )  and  10  ( motor   vehicle    liability ).      Class   3   is
accordingly deleted from the aviation ,          marine and transport
group of classes .
Article 5
This article adds a new Article 12a to Title III of the Second
Directive dealing with the special problems               peculiar     to
compulsory third party motor insurance :
 ---pagebreak---                           - 7 -
1 . The  operation    of  the   Supplementary Green    Card Agreement
    whereby ,   on the basis of Directive 72/ 166/EEC ,     green card
    checks were abolished .
    The system instituted by this Agreement operates as follows .
    All motor liability insurers in each Member State belong to
    and finance the national bureau .           This bureau gives a
    guarantee to other participating bureaux that it will accept
    financial liability for accidents caused in the territories
    covered by those other bureaux by a vehicle based in its own
    territory whether or not that vehicle was properly insured .
    The  bureau    of   the   country   of  the   accident   can    thus
    compensate the victims of such an accident ,        confident that
    it will be reimbursed by the bureau of             origin of the
    vehicle ,   and the authorities of the visited country have no
    need to check the insurance of visiting vehicles .
    The system is best illustrated by a simplified example . The
    bureau in State A accepts responsibility for all vehicles
    bearing a normal State A registration plate .         If a State A
    registered vehicle causes an accident in State B State B 's
    bureau will compensate the victims knowing that it will be
    reimbursed by        State A 's bureau . The State B authorities
    can treat the State A plate as sufficient evidence of
    insurance .
    Unless special arrangements were made , freedom of services
    in third party motor insurance would break this link between
    the country of the number plate and the insurer 's membership
    of the bureau of that same country .        State A 's bureau ,   in
    the above example , would no longer be able to give an
    unconditional guarantee for all State A plates , having no
    certainty that any given vehicle was insured by one of its
    own member insurers , and having no financial commitment from
    a non-member insurer .     Without the guarantee the bureaux of
 ---pagebreak---        other Member States would hesitate to compensate victims and
       the authorities would be obliged to reintroduce green card
       checks .
       As it stated in its report to Parliament on the Jansen
                 A
       Petition      ( document   PE   78.221    of   7   April   1982 ),    the
       Commission believes       that an     insurer covering       by way of
       freedom to provide services the liability of a vehicle
       bearing      the registration plate of a Member State can
       properly be obliged to join and participate in the financing
       of the bureau of that State .
       The  new    Article    12a   of   the   Second    Directive     therefore
       stipulates in its paragraph           2 that     the Member State of
       provision      of    services    shall     require     the    " services "
       undertaking to become a member of and participate in the
       financing of its national motor insurers' bureau .
       Clearly ,   and in line with existing practice , the membership
       contribution should be based on the premium income from this
       insurance class in the State in question or on the number of
       vehicles insured .
       The new provision makes it clear that no other payment or
       contribution may be required .          An annual membership fee or
       minimum   contribution     unrelated    to   the   volume   of business
       done in the Member State of provision of services would be
       an unacceptable obstacle to an undertaking covering a small
       number of risks or with a small premium income in this
       class .
A
  Report on freedom to provide services in respect of motor vehicle
  insurance against civil liability .
 ---pagebreak---                             - 9 -
2 . Operation of the national guarantee funds
    The Commission      similarly concluded        in doc .    PE  78.221 ,
    referred to above , that it was reasonable for a Member State
    to require an insurer covering locally-registered vehicles
    by way of freedom to provide services to join and contribute
    to the financing of the local guarantee fund .
                                                               5
    Member States are required by Directive 84 / 5/EEC to have a
    guarantee fund to ensure that accident victims are not left
    without compensation in the event that the party responsible
    for an accident is uninsured or unidentified .             The fund is
    financed in all Member States at least in part by a levy on
    motor insurance premiums .
    It seems equitable to maintain the link between the country
    of the registration plate and the insurer 's membership of
    that country’s guarantee fund , the fund being the expression
    of the solidarity of a Member State 's motoring population .
    The new Article 12a introduced by Article 5 of the new
    proposal therefore requires ,         again in its paragraph 2 , that
    the Member State of provision of services shall require the
    " services" undertaking to become a member of and participate
    in the financing of its national guarantee fund .               Again ,
    however ,    its financial contribution must be limited to 3
    payment calculated , as for established members , solely on
    the basis of its premium income from the motor vehicle
    liability class in the State in question or the number of
    risks in that class covered there .
3 . rhw.-safgguard.iog . of ..the_l                   j?arty.. xiriiis
    The reason for making third party motor insurance cc^tpulsory
    is to protect accident victims and their                            fc ?
    ensuring that compensation for their loss or irjtsry viil 1 --
    finaneed at least up to & minimum level                   by i.'tl
    law .
       ØJ sies L   11 d . 1984 , p . 17 .
                                                                             Jrt
 ---pagebreak---                        - 10 -
In a freedom of service context the motorist may decide that
it is in his interests to take out his liability insurance
with a foreign-based insurer .        The victim of an accident
caused by that motorist ,       however ,   has no choice in the
matter .
The victim of a road accident in Member State A caused by a
vehicle registered in that same Member State will not be
pleased to find that the liability insurer is far away in
Member State B and that he has to pursue his claim with him
there without being able to deal with somebody on the spot .
( The situation does not arise      if the vehicle causing the
accident is itself       registered in Member State B because
then ,    under existing arrangements within the green card
system , Member State A 's motor insurers' bureaux will assume
responsibility for claims settlement .)
In order to avoid placing third party claimants in a worse
situation when dealing with a " services" insurer rather than
with an   " established "  insurer  the new Article     12a of the
Second Directive added by Article 5 of the new proposal
therefore allows the Member State of provision of services
to   require   the   undertaking    providing    services   in this
insurance     class    to    nominate     a   claims     settlement
representative resident or established         in that State and
possessing the necessary powers to bind the undertaking .
It is further specified that the representative ,        who may be
an employee of the 'insurance undertaking , must limit his
activities on behalf of that undertaking to the handling and
settlement of claims .
Article 5 lastly stipulates that the representative is not
to   be  considered   as   an  establishment    of  the   insurance
undertaking and that his nomination will not constitute the
opening of a branch or agency of that undertaking .
                                                                    JA
 ---pagebreak--- PROPOSAL FOR A COUNCIL DIRECTIVE AMENDING , PARTICULARLY AS REGARDS
    MOTOR VEHICLE LIABILITY INSURANCE , FIRST COUNCIL DIRECTIVE
    73 / 239 / EEC , AND SECOND COUNCIL DIRECTIVE 88 / 357 / EEC ON THE
 COORDINATION OF LAWS , REGULATIONS AND ADMINISTRATIVE PROVISIONS
RELATING TO DIRECT INSURANCE OTHER THAN LIFE ASSURANCE AND LAYING
DOUN PROVISIONS TO FACILITATE THE EFFECTIVE EXERCISE OF FREEDOM TO
          PROVIDE SERVICES AND AMENDING DIRECTIVE 73 / 239 / EEC
 ---pagebreak---                                   1
THE COUNCIL OF THE EUROPEAN       COMMUNITIES ,
Having regard to the Treaty establishing the                European Economic
Community , and in particular Articles 57(2 ) and 66 thereof ,
                                                            1
Having regard to the proposal from the Commission ,
In cooperation with the European Parliament ^ ,
Having   regard    to   the    opinion     of   the    Economic      and   Social
Committee ^ ,
Whereas in order to        develop the      internal    insurance     market the
Second   Council    Directive    88 / 357/ EEC   of   22  June     1988   on  the
coordination of laws ,       regulations and administrative provisions
relating to direct insurance other than life assurance and laying
down provisions to facilitate the effective exercise of freedom to
                                                               4
provide services and amending Directive 73 / 239/EEC , hereinafter
referred to as the " second Directive ", made it easier for insurance
undertakings having their head office in the Community to provide
services   in   the   Member   States ,      thus   making    it   possible   for
policyholders to have recourse not only to insurers established in
their own country ,      but also to insurers which have their head
office in the Community and are established in other Member States ;
Whereas   the   scope   of   the   provisions      of  the    second    Directive
specifically    concerning     freedom      to   provide   services      excluded
certain risks ,   the application to which of the said provisions was
rendered inappropriate at that stage by the specific rules adopted
by the Member States' authorities , owing to the nature and social
implications of such provisions ; whereas those exclusions were to
be reexamined after the second Directive had been                in force for a
certain period ;
 2
 3
4
   OJ No L 172 , 4.7.1988 , p.1 .
                                                                                  A3
 ---pagebreak---  Whereas one of the exclusions concerned motor vehicle liability
 insurance , other than carrier 's liability ;
 Whereas ,   however , when the second Directive was adopted the
Commission gave an undertaking to present to the Council as soon as
possible a proposal concerning freedom to provide services in the
area of insurance against civil liability in respect of the use of
motor vehicles ( other than carrier 's liability ) ;
 Whereas ,   subject to the provisions of the second Directive
 concerning compulsory insurance , it is appropriate to provide for
the possibility of large risk treatment , within the meaning of
Article 5 of the said Directive ,     for the said insurance class of
motor vehicle liability ;
Whereas large risk treatment should also be envisaged for insurance
covering damage to or loss of land motor vehicles and land vehicles
other than motor vehicles ;
Whereas to ensure the continued proper functioning of the green
card system and the agreements between the national motor insurers'
bureaux it is appropriate to require insurance undertakings
providing motor liability insurance in a Member State by way of
provision of services to join and participate in the financing of
the bureau of that Member State ;
Whereas it is also appropriate to require insurance undertakings
providing motor liability insurance in a Member State by way of
provision of services to join and participate in the financing of
the guarantee fund set up in that Member State to pay compensation
to the victims of uninsured or unidentified vehicles ;
Whereas in order to ensure that third party claimants are not
prejudiced * or put to greater inconvenience where the motor
liability insurer is operating by way of the provision of services
rather than by way of an establishment Member States shall require
that insurance undertakings intending to provide services in this
 ---pagebreak---                            - 3 -
insurance class shall nominate a claims settlement representative
to be responsible for the processing and settlement of third party
claims ,
HAS ADOPTED THIS DIRECTIVE :
 ---pagebreak---                                 - 4 -
                                   Article 1
For the purposes of this Directive :
 ( a ) " first Directive " means :
                              5
       Directive 73/239/EEC      ;
 ( b ) " second Directive " means :
       Directive 88/357/EEC ;
 ( c ) "vehicle " means :
                                                                          6
       a vehicle as defined in Article 1(1 ) of Directive 72/ 166/EEC ;
 ( d ) " bureau " means :
       a national    insurers'  bureau   as defined    in Article   1(3 ) of
       Directive 72/ 166 /EEC ;
( e ) "guarantee fund " means :
       the body referred to in Article 1(4 ) of Directive 84/5/EEC 7 ,
                                   Article 2
In Article 5(d ) of the first Directive the phrase " risks classified
under classes 8 , 9 , 13 and 16 of point A of the Annex" in the first
paragraph of point ( iii ) is hereby replaced by the following :
" risks classified under classes 3 ,      8,  9 , 10 , 13 and 16 of point A
of the Annex".
                                   Artide 3
The second and third indents in the second paragraph of Article
12(2 ) of the second Directive are hereby deleted .
5 OJ No L 228 , 16.8.1973 , p. 3 .
6 OJ No L 103 , 2.5.1972 , p. 1 .
7 OJ No L 8 , 11.1.1984 , p. 17 .
                                                                             AL
 ---pagebreak---                                 Article 4
Article 22(1 ) of the second Directive is hereby replaced by the
following :
" 1 . Every establishment must inform its supervisory authority in
      respect of operations effected by way of provision of services
      of  the   amount   of   the   premiums ,    without    deduction  of
      reinsurance ,   receivable   by  Member   State    and by   group of
      classes . The groups of classes shall be defined as follows :
      - accident and sickness (1 and 2 ),
      - motor insurance ( 3 , 7 and 10 ),
      - fire and other damage to property (8 and 9 ),
      - aviation , marine and transport ( 4 , 5 , 6 , 7 , 11 and 12 ),
      - general liability ( 13 ),
      - crédit and suretyship ( 14 and 15 ),
      - other classes ( 16,17 and 18 ).
      The supervisory authority of each Member State shall forward
      this information to the supervisory authorities of each of the
      Member States of provision of services ."
                                Article 5
The following Article 12a is hereby inserted in Title III of the
second Directive :
                               "Article 12a
1 . This Article shall apply where an undertaking ,             through an
    establishment situated in a Member State ,             covers a risk
    classified under No 10 of point A of the Annex to the first
    Directive which is situated in another Member State .
 ---pagebreak---                               - 6 -
2 . The Member State of provision of services shall require the
    undertaking to become a member of and participate in the
    financing of its national bureau and its national guarantee
    fund .
    The undertaking shall not ,     however ,  be required to make any
    payment or contribution to the bureau or fund of the Member
    State of provision of services in respect of risks covered by
    way of provision of services other than one calculated , on the
    same basis as for undertakings covering risks in class No 10
    through an establishment in that State , by reference to its
    premium income from that class in that State or the number of
    risks in that class covered there .
3 . The Member State of provision of services shall require the
    undertaking to ensure that persons pursuing claims arising out
    of events occurring in its territory are not placed in a less
    favourable  situation    as   a  result   of  the  fact  that  the
    undertaking is covering a risk in class 10 by way of provision
    of services rather than through an establishment in that State .
    In particular , the Member State of provision of services may
    require the undertaking to nominate a representative resident or
    established in its territory who shall be responsible for the
    handling of claims and possess sufficient powers to bind the
    undertaking in relation to third parties and to represent it in
    relations with the courts of that Member State .
    The representative ,  who may be an employee of the undertaking ,
    shall limit his activities on behalf of that undertaking to the
    handling and settlement of such claims .
    Notwithstanding Article 3 ,   the nomination of the representative
    shall net in itself constitute the opening of a branch or agency
    for the purpose of Article 6<2)(d ) of the first Directive and
    the representative shall not be an establishment within the
    meaning of Article 2(c ) of this Directive ."
 ---pagebreak---                            - 7 -
                             Article 6
Member States shall amend their national provisions to comply with
                                                                 8
this Directive within     months of the date of its notification
and shall forthwith inform the Commission thereof .
The provisions amended in accordance with this Article shall be
applied within     months of the date of the notification of the
Directive .
                             Article 7
This Directive is addressed to the Member States .
Done at
                                          For the Council
                                          The President
 8
   This Directive was notified to Member States on