WRITTEN QUESTION No. 2984/98 by John McCARTIN Derogations in motor insurance in Ireland (SUPPLEMENTARY ANSWER)
29. 1. 2000 EN Official Journal of the European Communities C 27 E/9 (2000/C 27 E/010) WRITTEN QUESTION E-2984/98 by John McCartin (PPE) to the Commission (8 October 1998) Subject: Derogations in motor insurance in Ireland Will the Commission state whether the Irish market for motor vehicle insurance is affected by any derogations from EU competition policy or other legislation and can the Commission state when such derogations come to an end? Joint supplementary answer to Written Questions E-2983/98 and E-2984/98 given by Mr Monti on behalf of the Commission (5 August 1999) Further to its answer of 4 December 1998 (1), information. the Commission has now obtained the following Motor-vehicle insurance is covered by the third non-life insurance Directive, Council Directive 92/49/EEC of 18 June 1992 on the coordination of laws, regulations and administrative provisions relating to direct insurance other than life assurance and amending 73/239/EEC and 88/357/EEC (2) (class 10: third-party liability), which introduced a single system whereby authorisation, once obtained from the competent authorities of the home Member State, permits an undertaking to carry on business throughout the entire Community, under either the right of establishment or the freedom to provide services. The objective of this system (introduced by Articles 4 and 5 of Directive 92/49/EEC), is to increase competition in national markets so that consumers can choose the insurance product which suits them best and the insurer they prefer, irrespective of the companyís home Member State. In practice, however, market realities sometimes prevent the development of a satisfactory level of competition. The main problem lies in the differences in premiums set in the various Member States for third-party liability class. This is not incompatible with Community law because both the criteria used by insurance companies to set premiums and the number of claims submitted vary from Member State to Member State. Various factors influence the setting of premiums in each of the Member States and result in sometimes considerable differences in price. Firstly, differences between Member States in the level of compensation paid may influence the level of premiums. The Commission is currently examining the problem with a view to proposing a suitable solution and possibly submitting a proposal for a directive adjusting the minimum compensation per type of claim in the third-party liability class, as set out in the second car insurance Directive, Council Directive 84/5/EEC of 30 December 1983 on the approximation of the laws of the Member States relating to insurance against civil liability in respect of the use of motor vehicles (3). However, this Directive contains no binding stipulations about the amounts to be paid or the procedures to be followed by the Member States. The latter may set higher or lower amounts, provided that these are no lower than the minimum amounts stipulated in the Directive. The fact that some Member States offer a higher level of protection or have their own methods of assessing claims may lead ü among other things ü to higher premiums. Secondly, the third-generation insurance Directives introduced a single prudential and financial control system that is applicable by the Member State in which the insurance company is established. However, the criteria for assessing the financial health of firms are different in each Member State. It is the responsibility of the competent authorities of the home Member State to monitor the financial health of insurance companies, including their state of solvency and the establishment of adequate technical reserves. Estimates of premiums and other financial resources are intended to cover a companyís underwriting liabilities and solvency margin (Article 7 of Directive 92/49/EEC). The Directives also set out the minimum standards for technical reserves. The Member State which grants the authorisation may lay down stricter rules for the insurance companies for which it is responsible (Article 9 of Directive 92/49/EEC)