Borders bar drivers from cheapest insurance deals

Date: 19/06/1997

By Leyla Linton

THE cost of car insurance varies widely between EU countries, but consumers still cannot shop around despite the theoretical existence of the single market.

New figures compiled by the Belgian consumer organisation Test Achats and BEUC, the European consumers' lobby, show that, on average, France and Germany charge the highest premiums .

The survey of 48 car insurers in eight EU countries compared policies for a 25-year-old inexperienced driver and an accountant aged 40 who had not had an accident during the previous 12 years. It also compared a variety of cars from a Fiat Punto to a Mercedes.

The survey discovered that for young drivers, Portugal offered the cheapest car insurance, although individual insurers in other countries sometimes quoted cheaper rates. For experienced drivers, advantageous premiums were found in Spain.

Consumer groups say that although car insurers are, in theory, free to set up business in any Union country, in practice drivers cannot arrange cross-border coverage.

A degree of harmonisation does exist. All policies must offer civil responsibility coverage, insurers must have a representative in countries where they wish to sell their services and they must contribute to communal funds for victims of non-insured drivers.

But, according to BEUC, insurance companies still follow national regulations to a very large extent, and consumers find it difficult to compare the value of various policies due to a lack of transparency among insurers.

The organisation would also like to see action at European level to ensure that consumers can buy policies at reasonable prices and that the burden of proof in car insurance contracts lies with the insurer.

Miranda Seymour, of UK car insurers Direct Line, said that it was logistically complicated to provide car insurance abroad because of varying underwriting systems, language differences and problems in handling claims.