Duchy is latest no-claims target

Date: 14/02/02

By Laurence Frost

LUXEMBOURG is the latest target in Frits Bolkestein's legal crackdown on no-claims bonus insurance schemes that give drivers a raw deal.

The single market commissioner has written to the Grand Duchy formally demanding an end to its state-imposed bonus scheme.

Luxembourg joins Finland, Belgium and France in facing infringement proceedings at the European Court of Justice unless they abandon laws which limit the discounts insurance companies can offer to safe drivers.

'We have no problem with no-claims bonus sytems,' said Bolkestein's spokesman Jonathan Todd. 'Our problem is when they are imposed by the state.'

The Commission has targeted the four states because their laws prescribe the level of premium discounts that can be given to a driver each year, as well as setting a maximum limit.

This breaches the terms of the 1992 Non-Life Insurance Directive, which gives insurers freedom to set their own premium scales. 'This means there isn't effective competition,' said Todd. 'Companies are prevented from offering a greater discount if they want to.'

The formal demand means the Duchy has two months to change its no-claims scheme or face legal action.

Luxembourg is the latest target in Frits Bolkestein's legal crackdown on no-claims bonus insurance schemes that give drivers a raw deal.