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The 2009 Motor Insurance Directive is paramount for materialising the fundamental right of freedom of movement for European citizens across the EU.The said Directive is a further step to consolidate the market in the motor insurance sector, while promoting the protection of both policyholders and victims of road traffic accidents. The Commission’s amendment proposals address key issues of cover in case of insolvency of an insurer, and minimum cover inconsistency. Moreover, EU Parliament’s and Council’s input strengthens deployment of claim history statements in calculating premiums, and insurance checks on non-domestic vehicles while preserving rights and freedoms. All of the aforementioned proposals on scope manage to integrate important case law, while the individual selection will depend on public policy and alternative cover.
2009 Motor insurance Directive – What does it do?
Under the 2009 Motor Insurance Directive, compulsory motor insurance coverage is geographically extended as to include claims from incidents occurring at any EU Member State. Therefore, the 2009 Motor Insurance Directive allows policyholders to travel throughout Europe, with one single premium and no additional insurance. Specifically, the Directive:
- obliges all motor vehicles in the EU to be covered by compulsory third party insurance on the basis of a single premium
- abolishes border checks on insurance, so that vehicles can be driven easily between EU Member States
- specifies minimum third-party liability insurance cover in EU Member States
- specifies exempt persons and authorities responsible for compensation
- obliges Member States to guarantee compensation of victims of accidents by uninsured/unidentified vehicles
- introduces a mechanism to compensate local victims of accidents caused by vehicles from other EU Member States
- requires claims on accidents in EU Member State other than the victim’s to be settled quickly
- entitles policyholders to request a statement of claims history involving their vehicle covered by the insurance contract at least during the preceding five (5) years of the contractual relationship.
Proposed Amendments – What is wrong with the 2009 Directive?
The proposed amendments cover five distinct areas: insolvency of the insurer; claims history; risks due to uninsured driving; minimum amount of cover; and scope of the Directive. These are examined below in turn, however, prior to proceeding with our analysis, a brief reminder on the key players in the EU ordinary legislative procedure.
The European Parliament represents EU citizens and is directly elected by them, the Council of the European Union represents the individual governments of the Member States, and the European Commission represents the Union as a whole. The Commission proposes new laws, and the Parliament and Council adopt them. The Commission and the Member States then implement them.
Insolvency of the Insurer
The problem: The 2009 Directive caters for the creation of compensation bodies which provide cover for accidents by uninsured and unidentified vehicles, but such bodies do not provide compensation when the insurer becomes insolvent.
The solution: The Commission proposes inserting Article 10a which calls for Member States to set up a compensatory body providing cover in case of bankruptcy, winding-up, or where no reasoned answer to the claim comes forth within three months. The amendments proposed by EU Parliament and Council are in sync, and Article 10a certainly constitutes a step in the right direction.
The problem: Under the 2009 Directive policyholders are entitled to request a claims history statement covering the past five years in all Member States. However, there is no obligation for these statements to be taken into account when calculating premiums, which are often ignored, and whose authenticity is sometimes questioned.
The solution: The Commission proposes amending Article 16 adding three subparagraphs. The first one ensures “insurance undertakings… do not treat policyholders in a discriminatory manner or surcharge their premiums because of their nationality or … previous Member State of residence”. The second requires insurers publish their policies in calculating premiums via claims history statements. The third sets out specific content requirements in an effort to homogenise claims history statements across Member States, leading to greater integration. The EU Parliament further adds the proviso that when an insurer takes into account claims history statements from one Member State, it shall do so from any Member State. This latter amendment is seen as a more effective approach in addressing the problem.
Risks due to Uninsured Driving
The problem: Uninsured driving affects accident victims, insurers, guarantee funds and policyholders. Under Article 3 of the 2009 Directive, Member States are obliged to “take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance“, though the measures in question are not specified. The main problem, however, arises out of Article 4 which prohibits insurance checks on vehicles from other Member States, in an effort not to obstruct free movement of vehicles hence people. Uninsured drivers may thus slip through the net. Moreover, such checks require free flow of information between Member States, which may stumble upon provisions of the General Data Protection Regulation (GDPR).
The solution: The Commission proposes amending Article 4, adding that Member States may carry out “such checks on insurance provided that those checks are non-discriminatory, necessary and proportionate … and a) are carried out as part of a control which is not aimed exclusively at insurance verification or b) they form part of a general system of checks on the national territory and do not require the vehicle to stop”. The proposed amendment further allows personal data processing to combat uninsured driving. EU Parliament’s amendments incorporate checks and balances on the use of such data, which must not be retained longer than strictly necessary and are erased in case the compulsory insurance checks, while Council’s amendments include laying down suitable measures to safeguard the data subject’s rights and freedoms. EU Parliament’s and Council’s proposals are both necessary and complementary, and when combined with the Commission’s achieve the desired result.
Minimum Amount of Cover
The problem: Article 9 of the 2009 Directive sets out a minimum obligatory cover under a motor insurance policy, which ensures minimum protection for personal injury and material damage across the EU. Nonetheless, 13 Member States are currently subject to lower minimum amounts, benefiting from certain transition periods which still impact recalculation of minimum coverage.
The solution: Under the Commission’s proposals, Article 9 is amended removing the transition period previously contained therein, which enabled Member States both to establish such period, and to indicate its duration. EU Parliament’s and Council’s proposals are in sync, and given the problem was specifically caused by the transition period, the proposed amendment is seen as adequate.
Scope of the Directive
The problem: By far, the most interesting discussion lies on the scope of the Directive, and more specifically, on what constitutes a ‘vehicle’ and/or ‘use of a vehicle’ within the scope of motor insurance. Article 1 of the 2009 Directive defines vehicle as ‘any motor vehicle intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled’, while Article 3 stipulates “Each Member State shall … take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance”.
To date there is significant case law which demarcates the scope of ‘vehicle’ and/or ‘use of a vehicle’, though such case law is not codified in legislation, which in turn allows room for interpretation, and claims against compensation bodies or even Member States for incorrect implementation. Certain notable examples should illustrate the point. In Vnuk, the Claimant was injured, when a trailer attached to a tractor driven on private land struck his ladder. The Court held that the definition of a vehicle did not depend on its use at the material time, and that compulsory insurance did not exclude vehicle use on private land, and did cover accidents arising out of the normal function of the vehicle. In Rodrigues v Andrade, a stationary tractor was powering a herbicide spray device, and the engine vibration contributed to a landslip which resulted in the tractor being displaced, colliding with and mortally wounding the Claimant’s spouse. The Court held that ‘use of a vehicle’ did not depend on terrain, or on whether the vehicle was stationary, but rather on whether the vehicle was primarily used as a means of transport at the material time.
The solution: The Commission introduces the definition of ‘use of vehicle’ inserting paragraph 1a in Article 1, incorporating both Vnuk and Rodrigues, which reads: “‘use of a vehicle’ means any use of such vehicle, intended normally to serve as a means of transport, that is consistent with the normal function of that vehicle, irrespective of the vehicle’s characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion.”. EU Parliament further adds to 1a that “‘use of a vehicle’ means any use of a vehicle in traffic that is consistent with the vehicle’s function as a means of transport at the time of the accident”, thus narrowing the scope considerably , while the Council’s proposals simply echo the addition of ‘at the time of the accident’. ‘At the time of the accident’ constitutes a crucial addition to the Commission’s proposals integrating case law. Whether the ‘in traffic’ requirement under EU Parliament’s proposals should be assimilated depends, in our view, on public policy, and on whether alternative insurance cover exists and/or can be purchased to cover accidents that would fall outside this somewhat narrower scope of motor insurance. Both approaches achieve incorporating important case law mentioned above.
Furthermore, and for completion purposes, Council’s proposals amend the Article 1 definition of ‘vehicle’ to include a maximum design speed of more than 25 km/h, or a maximum net weight of more than 25 kg, and to exclude wheelchair vehicles for the handicapped, while EU Parliament’s proposals amend Article 2 to exclude vehicles used exclusively in motor sports (on the latter, Council narrows down the motorsport exclusion to where alternative insurance cover exists).
The 2009 Motor Insurance Directive is crucial in enabling free movement of vehicles hence people across Member States, without requiring the purchase of additional insurance at the border. Though it achieves this principal aim, issues exist on cover in case of insurer insolvency, claim history statements, persistent uninsured driving, minimum cover across Member States, and the scope of the Directive.
The Commission’s exclusion of a transition period under Article 9 appears to solve the issue on minimum cover, while its insertion of new Article 10a introduces a compensation body in case of insolvency, or where no reasoned answer is received within time. Regarding insurance checks on vehicles from other Member States to address uninsured driving, EU Parliament’s and Council’s checks and balances on use of personal data are seen as both desirable and non-obstructing. In using claims history statements when calculating premium, Commission’s efforts towards homogenisation are laudable, and EU Parliament’s proviso that insurers become obligated to use non-domestic statements where they use domestic ones in calculating the premium is seen as a more effective means of solving the problem. Finally, on scope of the Directive, the Commission, the EU Parliament and the Council all efficiently integrate case law in their proposals, and whether the ‘in traffic’ requirement on EU Parliament’s amendment is accepted will depend on public policy, and the existence of alternative cover.
 C-162/13;  RTR 10 (CJEU).
 C-514/16;  4 WLR 75 (CJEU)