Motor insurance

The bonus-malus premium system

The EU’s Non-Life Directives which set out the framework for the regulation of insurance companies draw a clear distinction between financial control and ‘material control’. The latter involves the regulation of policy terms and premium rates, and has been rendered unlawful. The focus of regulation is on the conduct and solvency of insurers, and not the terms of their policies and the amount of their premiums. In Commission of the European Communities v French Republic (Case C-347/02) the European Court of Justice has given a clean bill of health to French measures which encourage safe driving by premium control. There is an almost identical parallel decision in Commission of the European Communities v Luxembourg (Case C-346/02), but this adds nothing to the French decision.