Car insurances rules spark a war of words

Date: 26/10/1995

By Fiona McHugh

THE European Commission has reacted angrily to remarks by the Belgian Economics Minister Elio Di Rupo concerning a controversial no-claims-bonus car insurance scheme in use in Belgium.

Commenting on Rupo's defence of his country's mandatory no-claims-bonus system, a senior Commission official warned: “If any member state persists in ignoring the Commission's view, the European Court of Justice will decide.”

The warning came in the wake of Belgian press reports that Di Rupo had spoken out against what he said were EU plans to scrap no-claims-bonus systems which reward good drivers and penalise bad ones.

The Commission official countered: “The Commission has absolutely no intention of abolishing no-claims-bonus systems as long as they are not imposed by a member state.

“Under EU insurance directives, insurance companies remain free to apply whichever no-claims-bonus system they like. However, the Commission considers the imposition by a member state's insurance supervisory authorities of a standardised no-claims-bonus system on all companies offering car insurance on that member state's market to be a restriction of competition and incompatible with the 3rd Non-life Insurance Directive.”

That directive, aimed at liberalising the insurance market by allowing licensed companies to do business in EU member states other than their own, came into force on 1 July 1994. It allows providers of insurance to set their own no-claims-bonus levels as part of their overall pricing policy, a freedom which has been ignored by Belgium, France, Greece and Italy.

Belgium, arguing the “general good” is at stake, has continued to insist on uniform bonus levels. It claims such measures help reduce the number of road accidents, a claim which the Commission refutes.

“It is a moot point whether the prospect of having to pay a higher premium next time round really makes drivers exercise greater care, or whether it does not rather make them think twice before reporting any accidents they may have caused,” the Commission official said.

Belgium, according to a recent survey, has one of the highest accident rates in the Union.

Member state implementation of the insurance directive is currently under Commission scrutiny and member states who fail to transpose it are likely to end up in court.