Brussels, 26/06/2007 (Agence Europe) - On Monday 25 June, the Commission published a report presenting the results of public consultation on two elements relating to European motor insurance legislation: 1) the effectiveness of claims representatives in settling claims on behalf of insurance companies not established in a member state; and 2) insurance cover for legal expenses relating to a road accident (see EUROPE 9170). The Commission considers it is not necessary to launch a legislative initiative at European level on these two issues.
One of the aims of the Fourth Motor Insurance Directive (2000/26/EC) is to enable “visiting victims” (people who have been injured or suffered damages outside their member states of residence) to get faster compensation in their member state of residence. Under this directive, motor insurance companies have to appoint claims representatives in each member state, apart from the one in which they are authorised to conduct insurance business. This means visiting victims can address their claims to the claims representative of the member state of residence, in their own language, and do not need to contact directly the insurer of the liable person in the member state where the accident occurred. Insurers may be fined if they or their claims representatives take more than three months to make a reasoned reply to a compensation request. The level of the fine is determined by the member state in which the insurer is registered, and interest is charged on the compensation due. In its report, the Commission notes that “national penalties, though not equivalent, appear to have the desired effect”. The report shows that insurers and their claims representatives “are generally able to handle claims within the three-month timescale” for a reasoned reply. It goes on to conclude that there is “no reason” to take measures or set out proposals in this respect.
During the preparation of the Fifth Motor Insurance Directive (2005/14/EC), the European Parliament raised some questions related to the insurance cover for legal expenses. In particular, these questions concerned the availability of the insurance on a voluntary basis and the impact on the cost of premiums of the obligatory inclusion of cover for the victim's legal costs in third-party liability insurance. The report notes the differences from one member state to the next when it comes to dealing with cross-border litigation, mainly because the law applicable to the claims request is always the law of the country where the accident occurs. However, “EU-wide extension of the scope of cover for third-party liability insurance to include legal costs would be very unlikely to provide clear benefits”, it adds. According to the Commission, this could encourage victims to take the case to court without considering the possibility of out-of-court settlement. It would also threaten the mechanism of the representatives and “might lead to an increase in premiums in countries where either no or limited reimbursement of legal costs has been the practice so far”. The European institution therefore takes the view that voluntary legal protection insurance in force in most member states is the most complete and most satisfactory solution, while recognising that better promotion of voluntary legal expenses contracts is necessary in some member states in order to ensure a more balanced level of protection for EU citizens. (mb)