The European Commission has issued a report addressed to the European Parliament and the Council on two motor insurance issues – the effectiveness of claims representatives in settling claims, and insurance cover for legal expenses. Based upon various consultations carried out in 2006 with Member States, industry and the public, the report concludes that claims representatives are generally able to handle claims within the required timescale. The report also concludes that voluntary legal expenses insurance is available in the large majority of Member States and that the obligatory inclusion of legal costs in third-party liability insurance would not produce clear benefits.


Internal Market and Services Commissioner Charlie McCreevy said: “Europeans must be able to use their cars in other Member States as they would at home – confident that they have adequate insurance coverage and that any claim will be dealt with quickly and efficiently. Based on extensive consultation, we believe that EU rules in these areas are working effectively.”

Effectiveness of claims representatives

One of the aims of the Fourth Motor Insurance Directive (2000/26/EC) is to enable ‘visiting victims’ (people who have been injured or suffered damages outside their Member State of residence) to get faster compensation in their Member State of residence. Under Article 4 of this Directive, motor insurance companies have had to appoint claims representatives in each Member State, apart from the one in which they are authorised to conduct insurance business. This means visiting victims can address their claims to the claims representative of their Member State of residence, in their own language, and do not need to contact directly the insurer of the liable person in the Member State where the accident occurred. Insurers may be fined if they or their claims representatives take more than three months to make a 'reasoned reply' to a compensation request. The level of the fine is determined by the Member State in which the insurer is registered, and interest is charged on the compensation due.

The report shows that insurers and their claims representatives are generally able to handle claims within the three-month timescale. Only in exceptional and isolated cases, linked to difficulties in receiving information from other parties involved in the settlement of claims, can the deadline not be met. The report therefore concludes that changes to the EU legislation in question are not necessary, as national penalties, though not equivalent, appear to have the desired effect.

Legal expenses

During the preparation of the Fifth Motor Insurance Directive, the European Parliament raised some questions related to the insurance cover for legal expenses. In particular, these questions concerned the availability of this insurance on a voluntary basis, and the impact on the cost of premiums of the obligatory inclusion of cover for the victim's legal costs in third-party liability insurance.

The report concludes that voluntary legal expenses insurance is available in the large majority of Member States and that an EU-wide extension of the scope of cover for third-party liability insurance to include legal costs would be very unlikely to provide clear benefits, and might lead to an increase in premiums in countries where either no or limited reimbursement of legal costs has been the practice so far. The report also observes that better promotion of voluntary legal expenses contracts is necessary in some Member States in order to ensure a more balanced level of protection for EU citizens.