Motor insurance abroad

Publication date: 03 July 2008

Bulgarian MEP Nickolay Mladenov is a member of the European Parliament's committee on internal market and consumer protection. Mladenov's own initiative report on motor insurance was scheduled for vote by the Parliament in mid-June. The FIA European Bureau took the opportunity to talk to the young MEP from new Member State Bulgaria.

FIA European Bureau: Why did you decide to draft this own initiative report on motor insurance?

MLADENOV: The report is a response to the study undertaken by the European Commission. During discussions on the Fourth Motor Insurance Directive, it was agreed that the Commission would undertake a study and report back on certain issues raised by the European Parliament, but not included in the Directive. Such questions include, for instance, whether and how effective are national penalty provisions or the claims representative mechanism; is there a need for Community level harmonisation. And, perhaps most importantly for the consumer, what is the current availability of voluntary and additional legal expenses insurance that can be taken out by potential victims of road accidents?

Motor insurance is a contentious subject with various competing interests. Can we be sure that car drivers get a fair deal?

In preparing the report, I consulted extensively with representatives of consumer organisations, the motor insurance industry and national authorities. Consultations also took into account the fact that the insurance market is still developing in many of the new Member States. My goal was to propose, to the European Parliament, a balanced approach. Motor insurance legislation should provide a higher level of protection to victims of accidents without creating unnecessary burdens on industry nor increasing bureaucracy.

What is your opinion on the introduction of compulsory legal expenses insurance?

Detailed analysis suggests that the introduction of compulsory legal expenses insurance would create an additional and more complex workload for the judiciary. It could possibly create corresponding delays in dispute resolution as well as a higher percentage of unjustified claims. Rather than introduce a new compulsory obligation, my report suggests increasing consumer awareness of the availability of insurance for legal costs that is currently available in most Member States.

Legal expenses insurers have already provided cover for all types of cross-border cases for a number of years. In those EU markets where legal expenses insurance is still a relatively new product, this type of insurance needs to be promoted through public information campaigns by national authorities, the insurance industry and consumer organisations. Similarly, pre-contractual information on motor insurance should include information as to the option of taking out legal expenses cover. Consumers, who do not want to take out this insurance, should also have the option to declare that they are aware of the possibility of taking it. Both of these actions would allow consumers to make an informed choice.

How effective do you see the claims representatives system established by the Fourth Directive?

Currently, the claims representatives system is well known in all Member States and functions well. Further to this, national information centres have been set up and through them all victims of cross-border road traffic accidents (drivers, passengers and pedestrians) can find out how they can pursue their claims against the other parties. However, consumer confidence would be increased if appropriate measures were identified that provide consumers with the contact details of the relevant national information centres if they need additional information. Additionally, as part of the pre-contractual information package, consumers should receive comprehensive information of how the claims representative system works as well as its use and benefit to the insured party.

Is the system working effectively whereby sanctions are foreseen by the Fourth Directive if victims do not receive a reply from their insurer within three months?

These national penalty provisions, and their effectiveness, are still being examined by the Commission. Consultations with national authorities have confirmed that current system is adequate and national implementation is effective across the EU. My report, however, recommends that the Commission should continue to monitor, coordinate and help if national authorities ask for assistance. This is especially true given the rapid increase in the number of Europeans travelling to other EU Member States following enlargement of the EU and Schengen zone.