France and Luxembourg have been referred to the Europe Court of Justice on the grounds that their compulsory no-claims bonus systems for third-party motor insurance are in breach of the EU’s insurance regulations. In both countries premiums are determined by “detailed, mandatory criteria laid down by law that are incompatible with the freedom to market insurance products,” the European Commission said.
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Member states had a right to introduce a scale that took into account damage caused by policyholders or even a uniform no-claims bonus system “but insofar as mandatory no-claims bonus systems have automatic and mandatory repercussions on premiums they breach the principle of tariff freedom,” Brussels said.
If EU legislation was correctly applied, insurers were free to set prices and apply no-claims discounts or raise premiums taking account of a number of factors and not just the number of accidents, the Commission said. This increased competition, to the benefit of consumers.
