Instruments applied against uninsured driving Warsaw International Motor Insurance Forum

1. Instruments applied against uninsured driving Warsaw International Motor Insurance Forum 8 May 2008 Caroline Maion Manager, Legal & Technical

2. Instruments applied against uninsured driving • Why is uninsured driving an issue? • How is the level of uninsured driving estimated? • What kind of good practices exist to fight against uninsured driving?

3. CoB manages the International Motor Insurance/Green Card system under the aegis of the UN ECE • 44 Members (National Motor Insurers’ Bureaux) • Mainly from Europe and Countries bordering the Caspian & Mediterranean Sea • CoB also ensures secretarial services for the 4th MID bodies (GF & CB of the 30 EEA MS)

4. I. Why is uninsured driving an issue? • Uninsured driving has a cost. • +/-3%* of EEA motorists are uninsured. • +/- €11* is the increased cost incurred to pay for uninsured driving for an average annual MTPL premium of below €500* in the EEA. (*= rounded sums for 2003)

5. I. Why is uninsured driving an issue? This cost is not spread equally across the EEA: • For MS with low levels of uninsured driving (e.g. DE), the cost can be less than €1 per policy. • In MS with higher levels of non-insurance, the cost can reach €50 per policyholder.

6. I. Why is uninsured driving an issue? These costs can be significant for GF’s in MS with • low MTPL premiums; • and in case of major claims caused by uninsured drivers.

7. I. Why is uninsured driving an issue? • Increased insurance premiums to absorb the cost of uninsured driving. • Cost paid by either • GF’s levies on motor insurers • or general/special taxation

8. II. How is the level of uninsured driving estimated? • No single method of calculation. • Each method has its limits. • Combination of methods: • Comparison of the GF’s claims related to uninsured vehicles with those of the national market ; • Comparison of the yearly estimates done by the GF on the cost of accidents caused by uninsured vehicles with the costs of accidents at national level.

9. III. Good practices • CoB survey • 12 Bureaux with the lowest rate of uninsured driving were consulted in March 2007: AT, BE, CH/LI, DE, DK, FI, IT, IS, LU, NL, PT & SE • =) 6 Good practices

10. 1) Education/ Awareness E.g.: CH/LI • Educational campaigns & public advertisements at national level - to explain to the citizens with simple words the reasons and needs for insuring a vehicle. • To improve citizens' awareness by providing them with a better understanding on • why a vehicle must be insured against 3rd party liability; • what the consequences are of driving an uninsured vehicle.

11. 2) MTPL cover = a prerequisite for registration Provision of valid MTPL cover prior to the delivery of the registration plates: (e.g. AT, BE, DE, DK, CH/LI,…) • This practice is relatively widespread!

12. 3) Automatic renewal of the MTPL cover Followed by adequate measures in the event of unpaid premiums: (e.g. DK) • MTPL cover automatically renewed until the removal of the plates by the police in the event of unpaid premiums (e.g. 4 weeks). • The insurer compensated the victim for accidents occurring during the time needed to withdraw the plates. • The insurer has a right of recourse against the defaulting MTPL policyholder. • The insurer sends reminders to the defaulting policyholder as a warning about the cancellation of the MTPL cover. • Practice often related to • a reporting system • & efficient IT links between relevant authorities (Info. Centre, GF, etc…).

13. 4) Sticker Sticker on the windscreen showing the expiry date of the MTPL cover: (e.g. IT) • Practice used by some MS. • Other MS stopped this practice. • Possible ‘dissuasive effect’ on a potentially defaulting policyholder.

14. 5) MTPL Premium Fixing Office BE, ES & FR • Some uninsured drivers faced with • unaffordable costs for the premium or • the unavailability of the MTPL cover on the market (due to high rate of accidents, delay in the premium payment, etc..). • 3 MS set up a scheme allowing those motorists under strict conditions to obtain MTPL cover either with the help of a so-called“MTPL Premium Fixing Office”or within the GF acting as a direct insurer.

15. 6) Punitive measures • Penal sanctions & fines usually higher than the MTPL premium. • Withdrawal of registration plates by the Enforcement Authorities. • Insurers’ right of recourse against the person liable to insure the vehicle.

16. 6. Punitive measures E.g. the SE experience: • Unrecoverable costs transferred to the uninsured motorists instead of being passed on to the mass of law-abiding motorists as done before. • Right to levy a special charge (= MTPL charge) granted to the Swedish Motor Insurers Bureau by law on vehicle owners as long as their vehicle remains uninsured. • MTPL charge can be 10% higher than the highest MTPL premium applied by any insurer over the same period of time for the same kind of vehicle used in the same way. • The percentage of uninsured vehicles decreased • from 1.83 % to 1.31% between 1978 and 1998; • & to 0.95% after the increase in MTPL charges in 1999.

17. IV. Conclusion Catalogue of good practice • Some of these practices are good for some MS but might not be so good for others. • Important not to impose any practice at international level, but to allow each MS to choose the most suitable practice in accordance with its own situation (market ,economy…)

18. What are your views? Thank you for your attention Website:www.cobx.org secretariat@cobx.org