Certain issues relating to motor insurance (debate) 
President
The next item is the report by Mr Mladenov, on behalf of the Committee on Internal Market and Consumer Protection, on certain issues relating to motor insurance.
Nickolay Mladenov
rapporteur. - Mr President, Madam Commissioner, colleagues, and interpreters who are staying this late on such an interesting day as today with the European Council discussing Georgia, I hope you will have a little time and energy to focus on another report which is, despite its technicality, quite important for all of us.
It goes back to an issue raised in this House when the fourth Motor Insurance Directive was adopted. Back then, this House decided to ask the Commission to undertake a more in-depth study of a number of questions that were raised by Parliament but were not addressed in the fourth Motor Insurance Directive itself. Namely these three sets of questions: the first being to look into whether the national penalty provisions are effectively implemented across the European Union; then to look at how the claims representative system set up under the directive functions and whether there is a need to harmonise across the European Union; and finally to look at perhaps the most important and controversial issue that is intimately connected to questions raised by consumers which is whether the current availability of voluntary legal expenses schemes for motor insurance in Europe should be converted into a compulsory scheme to cover cross-border accidents across the European Union.
Let me start with the last question because that is perhaps the most important question and clearly one of the questions which is of most interest to European consumers. I myself when I went looking into this report was very much tempted to argue for harmonisation and to argue for compulsory legal expenses insurance across the European Union. But detailed study suggested that that might not be in the interests of the consumers or in the interests of the European insurance industry.
It would, if that were adopted, raise the costs of motor insurance for consumers in many Member States. It would create incentives for higher and unjustified claims to be made. It would create many delays in addressing existing claims and it would create a very strong disincentive for people to go for out-of-court settlements.
Finally, it would create a very strong and unfortunate burden on the judicial systems of our Member States, something which I do not believe any one of us really wants to do. So perhaps the other approach which this report suggests is the better approach and that is to increase awareness of existing voluntary schemes across the European Union.
Now, in many of the old Member States, they exist and function quite well and are now developing in the new Member States. In the new Member States in particular they need to be promoted more, perhaps through including them in pre-contractual information on taking out such options across the European Union with a particular focus on new Member States.
As far as the question of claims representatives is concerned, the European Commission did undertake a study. We looked at that study very carefully. We consulted with industry and we consulted with consumer organisations across the European Union, and national information centres have been set up in all Member States. Through these national information centres, consumers can pursue their claims and can find the information that they need.
Now what we do need to do there is to make consumers actually more aware of the existing system rather than try to set up a new system on top of it.
Finally, on the question of national penalty provisions and whether to harmonise them or not, the report argues that we should uphold the principle of subsidiarity. That means that existing national penalty provisions in European Member States have to be upheld. There is no need to harmonise. There is, however, a need for the European Commission to monitor the situation in more detail across the European Union and make sure that, when national authorities do need help, they receive that help from the European Commission.
This is the gist of the report that we are debating tonight.
Meglena Kuneva
Member of the Commission. - Mr President, on behalf of my colleague Commissioner Charlie McCreevy, let me first of all congratulate the Internal Market and Consumer Protection Committee and the Legal Affairs Committee, and in particular Mr Mladenov and Mr Gargani, for their work in producing a thorough and consistent report on a number of specific motor insurance issues.
Mr Mladenov, I cannot agree more with you that this is also a consumer issue.
The Commission welcomes your support for the conclusions we draw in our Motor Insurance report of 2007. Allow me to address briefly some issues covered in this report.
Let me start with national penalties introduced in respect of the reasoned offer procedure.
The Commission welcomes the clear position you have taken in the report on this issue. Indeed, your report seems to confirm our stance on the matter, namely that national penalty provisions, although not equivalent, produce the desired effect and therefore no harmonisation at EU level is needed in this respect.
The Commission will stay vigilant and take steps, if necessary, against those Member States which do not fully comply with the Directive's provisions in question. Therefore we can only welcome your call upon the Commission to further closely monitor the functioning of the mechanism introduced by the EU motor insurance Directives. The motor insurance expert group, set up by my services a year ago, brings Member States' representatives and stakeholders together and has proven to be a very useful tool to this end.
In line with your suggestion, the Commission will involve consumer organisations representing traffic accident victims in the process of assessing the effectiveness of the systems existing in the Member States.
Let me now turn to a second point: the legal expenses, which are very important for the consumers and for insurers as well.
Your report considers several pros and cons of a system where legal expenses would be compulsorily covered, EU-wide, by the motor insurance policy of the liable party. As stated in the Commission report of 2007, we are convinced that such a solution would be very unlikely to provide clear benefits for road traffic accident victims; it might even lead to a distortion of well-established national systems of motor claims settlement. In addition, premiums are likely to increase in those countries where either no or limited reimbursement of legal costs has been the practice so far.
I am pleased to see that your report reflects some of these concerns and that it gives preference to market-led solutions, such as the use of voluntary legal expenses insurance. It seems to be evident, though, that in some markets this type of insurance cover is hardly used, and that better promotion is needed. This is a mission the market should accomplish itself, as the Commission should not promote particular insurance products or particular lines of insurance business.
Finally, let me address the issue of the awareness of tools and mechanisms under the EU motor insurance directives.
The Commission agrees that there is room for improvement, especially in relation to the new Member States, as regards the degree of citizens' awareness of the tools created by the EU motor insurance directives, such as the claims representative mechanism or the existence of national information centres.
The insurance industry can and should play a major role in this area. The Commission has contributed to the information need of both traffic accident victims and motorists through the publication of a number of motor insurance leaflets placed on the 'Your Europe' portal. Many other information sources exist at national level, such as automobile clubs, motor insurance bureaux, claims settlement agencies and others.
In conclusion: Over the last years, regular reporting to the European Parliament on motor insurance issues has become a well-established practice and I am looking forward to our continued good cooperation.
Othmar Karas
representing the draftsman of the opinion of the Committee on Legal Affairs. - (DE) Mr President, Commissioner, rapporteur, ladies and gentlemen, on behalf of the Chairman of the Committee on Legal Affairs, Mr Gargani, I should like to thank the rapporteur for his report and the good cooperation.
There are three points in particular which I should like to mention: firstly, consumers' interests; secondly, the principle of subsidiarity, and thirdly, relevance. We believe it is far more in line with consumers' interests not to convert voluntary legal expenses schemes for motor insurance in Europe into a compulsory scheme. We do not need mandatory product bundling or product integration which would simply push up the price of insurance and restrict consumer choice.
On the issue of subsidiarity, I welcome the fact that the rapporteur is not attempting to drive forward harmonisation at all costs. The countries in which some legal costs are already covered by motor insurance can continue with this type of scheme without other countries being forced to follow suit.
As to the issue of relevance, I would remind the House that we are dealing with an issue which, in numerical terms, is of only very limited relevance. Cross-border accidents account for only around 1% of road traffic accidents in Europe, and almost all of them are settled out of court. I congratulate the rapporteur on the report.
Andreas Schwab
on behalf of the PPE-DE Group. - (DE) Mr President, Commissioner, ladies and gentlemen, I should like to start by thanking my colleague Nickolay Mladenov for his truly excellent work on this very difficult issue. His own-initiative report covers all the key problems and does so quite outstandingly.
Nonetheless, I would point out that this report is just one little piece of the puzzle in people's everyday dealings with the EU. Mr Karas has rightly pointed out that cross-border accidents account for a very small percentage of road traffic accidents and that most of them are settled out of court. However, a major German weekly newspaper published an article last week which described how an ordinary citizen wished to re-register a German car in Italy, only to fail eight months later, having realised that it is simply not possible. Citizens dealing with this type of problem on an individual basis feel extremely unhappy about it.
That is why the report, with its incentive for voluntary schemes, is the right approach. However, the Member States have a role to play in determining whether harmonisation of compensation law in the European Union might not, in the long term, be a far better solution which is more in line with citizens' interests.
Here in Parliament and especially in the Committee on Legal Affairs, we have dealt with the issue of non-contractual damages - in the case of Rome II, for example - on various occasions and it is now up to the Member States to look at which alternative solutions they can identify, if harmonisation of compensation law and the adoption of legal costs as damages is not possible for this House due to the issue of competence.
This is an issue which we will need to resolve in future. That being the case, Mr Mladenov's proposal is outstanding and deserves our support.
Diana Wallis
on behalf of the ALDE Group. - Mr President, motor insurance has been a success story of this Parliament and the long line of directives still actually represents some unfinished business - business which sadly involves an increasing number of our citizens as they exercise their rights of free movement across the Union.
Mr Mladenov's report makes a very important contribution to the ongoing work. It is clear that claims need to be simplified as much as possible and the three-month period has to be respected. Accident trauma must not be increased by legal trauma. We know that there are complicated issues of conflict of law that this Parliament wanted to solve in our approach to the Rome II Regulation. We have now been assisted by the Court of Justice in its Oldenburg judgment, where the Court has read together the fourth Directive and the Brussels Regulation in the way we intended, allowing a victim to take direct legal action in their country of residence rather than going to the defendant's court. This will put pressure on the need for out-of-court settlements. It is an important development. It may in the short term create some difficulties but, Commissioner, you need to ensure that Member States respect this judgment and this interpretation of EU law.
The next step is to devise a system arising from the Rome II follow-up studies that ensures that victims are compensated fully in relation to their home country circumstances. The story is ongoing but the achievements, likewise, are very far from being inconsiderable.
Malcolm Harbour
Mr President, first of all I want to join in thanking Nickolay Mladenov for a very important and serious piece of work. His first major report for the Committee on the Internal Market will, I hope, be the first of many. It has been very helpful that he has come in and looked at this issue with fresh eyes, representing citizens who are enjoying new entitlements through their membership of the European Union and who perhaps expect some of these issues to be dealt with better than in the past.
I want to build on some of the points that a number of my colleagues have made, particularly Diana Wallis and Andrew Schwab. Diana and I have been involved in this area since we came to Parliament in 1999, and therefore understand its importance. I think it is fair to say that if Parliament had not consistently raised these issues with the Commission and said that the motor insurance regime, and particularly its cross-border aspects for mobile motorists, was deeply unsatisfactory, then I do not think that we would be where we are now, anywhere close to the fourth Motor Insurance Directive, and maybe looking for a fifth.
This shows how Parliament really can reflect the interests of citizens in what are complex cross-border issues, but ones that do not come into play unless people run into serious problems. People have brought their problems to us, when they have had accidents in other countries and are unable to claim compensation for what are, in many cases, severe or even lifelong injuries.
I was pleased that the Commissioner, in line with her very strong commitment to consumers and the energy she has brought to this portfolio, wanted to seize this issue. However, I would particularly highlight what Nikolay Mladenov says in his report about the need to step up the level of cooperation between the insurance industry, Member States and the Commission, in order to get better deals under existing legislation. We are acting as a ginger group to put salt and pepper into the system, and I feel we are entitled to a bit more support from the European insurance industry.
Zita Pleštinská
(SK) Like my fellow Members who have contributed to today's debate, I too consider Nickolay Mladenov's report to be correctly timed and very important with regard to consumer protection.
In the context of the increased volume of foreign automobile travel, especially following the enlargement of the EU and the extension of Schengen, many European citizens are becoming accident victims abroad and, through ignorance, often experience serious problems.
Before travelling abroad by car, citizens must be provided with basic information on how to handle claims. It is important to contact the appropriate information centres which, pursuant to the Fourth Motor Insurance Directive, are to be established in every Member State. The pre-contractual information package should include comprehensive information to consumers on how the claims representative system works and on legal expenses insurance.
Member States have established different systems and national regulatory bodies are better placed to guarantee the highest possible level of consumer protection in their national markets. For this reason, I agree with the rapporteur that it is not necessary to harmonise national penalty provisions at Community level.
Milan Gaľa
(SK) I consider the creation of a network of claims representatives to be a benefit of the 2000 Motor Insurance Directive. Their efforts will speed up the settlement of motoring claims.
As regards penalties for delays in addressing claims, I agree with the rapporteur's view. On the basis of subsidiarity, national regulatory bodies are better placed to guarantee the highest possible level of consumer protection in their national markets.
According to the available data, more than 90% of all claims are settled out of court so, in this respect, there is no need for the Commission's initiative to introduce compulsory legal expenses insurance across the European Union. It would raise the costs of compulsory motor insurance and burden the courts with additional disputes, which could be settled out of court.
The voluntary nature of legal expenses insurance needs to be retained and, in the new Member States, citizens must be provided with more information on insurance products.
Colm Burke
Mr President, as a legal practitioner who has dealt with cross-border claims, it is not all rosy in the garden as might be suggested in the report. While I welcome the report, some of the kind of problems that I have come across are problems where there is legal cost insurance and where the claimants are finding it difficult to recover costs on the basis of it. These claimants have gone through court procedures and expended monies in order to validate their claims and then find that, on the one hand, the insurer of the offending party which caused the accident is not paying the full costs of putting the case together, and on the other hand, their own insurance company, with whom they had insurance for covering legal costs, is also not paying up and is walking away from its responsibilities.
This is an area that we need to look at and be very careful about. I had one case, for instance, where we had to pay EUR 30 000 for a forensic accountant's report and where we were not allowed to recover the full cost of that report. Although the person had their own insurance, they were not able to add their own insurance policy for costs and were not able to recover under that policy either. That is a matter that we need to look at and make sure that it is properly monitored.
Meglena Kuneva
Member of the Commission. - Mr President, let me thank you once more for the very useful piece of work which Mr Mladenov presented with the help of his colleagues. It is very useful for the Commission as well. The Commission is preparing a study dealing with compensation levels awarded to cross-border victims and this issue was raised by Mrs Wallis and some other colleagues. We are aiming in this study at obtaining an objective, well-founded and evidence-based analysis of the issue. The study is under way and the Commission is examining the second interim report.
Mr Harbour also mentioned that we need to be very concrete in our work and cooperate firmly on this issue to make the internal market more complete both for businesses and for consumers. It is very important for this cooperation to be straightened up.
I am really more than glad to see that Mr Mladenov's report is doing this through the good set-up of the pieces of his work and also has such nice and meaningful support from his colleagues.
Once more, congratulations and thank you.
Nickolay Mladenov
rapporteur. - Mr President, I would like to thank the Commissioner and my colleagues for their very interesting and insightful comments on this report. I am a firm believer that the best-protected consumer is the consumer who is best informed on their rights and can defend those rights based on the information provided. We as legislators need to make sure that consumers receive information and are free to make the choice of whether to take certain protection against a certain risk or not, rather than to impose a uniform level on all of them.
Mrs Wallis, Andreas Schwab and Mr Burke raised extremely important points that go beyond the very limited scope of this report. I am very happy that Commissioner Kuneva has said that the Commission will pursue a further study of many of the questions raised in this House. I am convinced that Parliament will look very carefully at the study that the Commission produces, precisely to go back and look at the questions that Mr Burke has raised, which are absolutely valid and an increasing matter of discussion in many Member States, including my own. Mr Schwab raised the question of a uniform approach to damages, which is a very valid question for all of us. I hope that the Commission's study will address that issue.
Let me also say a couple of things about the follow-up to this report. I hope that the Commission will take very seriously its responsibility to monitor national authorities' implementation of existing penalty provisions. Indeed, when we were gathering information in order to put this report together, a small number of Member States were not very forthcoming in providing information on how the system functions in their societies, but we did manage to receive an adequate reply in the end. Looking carefully at how the system functions and at how it can be improved in the future is an important task that I am sure the Commission will take very seriously in the months and years to come.
President
The debate is closed.
The vote will take place on Tuesday.
