Issue No. 30 (May 2009)
- Editorial (by Ulf Blomgren)
- General Assembly: Welcome to Spain (by Antonio Escrivá)
- Internal Regulations: 60 years already... (by Alain Pire)
- Correspondents: The correspondents (by Françoise Dauphin)
- Green Card Bureaux: The Russian Green Card Bureau (by Sergey Razuvan)
- 4th MID: The implication of the CoB Secretariat in the 4th Motor Insurance Directive (by Caroline Maion)
- Agenda: Next meetings
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30th Issue of CoBnews
(by Ulf Blomgren)
This year The Council of Bureaux, the Managing organisation of the Green Card System (GCS), celebrates its 60th Anniversary. At the same time we are also publishing the 30th issue of CoBnews. You will find interesting materials to read, beginning with a Welcome Address to Spain written by the President of Ofesauto, Mr Antonio Escrivá, in preparation for the coming GA in Seville at the end of May. We all look forward to going to such a wonderful city and most of all to meet with all the participants of the Member Bureaux. We have a lot to decide and discuss. This will be reflected to some extent in this newsletter.
After the Welcome address our Secretary General, Mr Alain Pire, will reflect on Recommendation No 5. It is fundamental to our mission and expresses the foundations on which to set up a bureau as well as the functioning of a market driven entity in MTPL business, the most essential Non-Life business line of all.
Our Vice-President, Mrs Françoise Dauphin will, as chairperson of the Correspondents Working Group, which is of significant importance, deal with a topic that has attracted a lot of interest during the last few years. Since the introduction of the 4th MID and the appointment of claims representatives, the number of correspondents has also increased. Due to the specialised claims handling procedures in international MTPL claims, we are now witnessing a trend in the outsourcing of this procedure. An increasing number of International Claims handling agencies are now marketing their efforts not only on a domestic level but also on a European level. The CoB, as a facilitator for international claims handling, through its agreements, commentaries, transfer of know-how, watchdog function and finally as guarantor, has the mission of establishing well-functioning rules and workflow within a changed claims handling environment. In her article, Mrs Dauphin deals with the ideas which will be introduced to the markets later this year as a Charter for Correspondents.
Russia is our 45th member since the beginning of this year. We welcome Russia in the GCS. The Managing Director of RAMI, Mr Sergey Razuvan, will give us a brief presentation of the outcome so far.
One of the most promising achievements in our work during the last few years is the merging of the Administration of the GCS and the 4th MID structure into one, hosted at the CoB Secretariat in Brussels. This will certainly give us the opportunity to form a hub for International Claims Handling which means that, at the same time, we will also facilitate international claims handling by providing a fundamental practical infrastructure. We certainly now also have to focus on the 4th MID. Our Legal and Technical Manager, Ms Caroline Maion will present the structure of the 4th MID bodies and CoB’s involvement within that context.
As I mentioned at the beginning of this editorial, this is the 30th issue of CoBnews. I would finally like to ask for your contribution to this. Please contribute to the publishing of CoBnews with materials from your experience and your legal know-how.
I wish you all interesting and enjoyable reading!
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Welcome to Spain
(by Antonio Escrivá)
The Spanish Green Card Bureau and its Members have the pleasure of welcoming you to the 43rd General Assembly of the Council of Bureaux, which will take place in Spain (Seville) on 27th, 28th and 29th May 2009.
Spain is located in southwest Europe on the Iberian Peninsula and has a border with France and Andorra in the northeast along the Pyrenees mountain range and Portugal in the east. It is surrounded by the Atlantic Ocean, the Mediterranean Sea and the Cantabrian Sea. It occupies an area of 504.750 km2 and has a population of more than 46,000,000 inhabitants.
Spain is the third largest country in Western Europe and the fifth in population as it includes the Balearic Islands in the Mediterranean Sea, the Canary Islands in the Atlantic Ocean off the African coast and two autonomous cities in North Africa, Ceuta and Melilla. Its currency is the Euro.
The official language is Spanish which, after Mandarin Chinese and English, is the third most widely spoken language in the world.
Our country has an important tradition as regards tourism and is often visited by individuals from all over the world - 57.4 million in 2008 - who come for the sun that almost everyday strongly lights up our landscapes and which gives us our happy and extrovert character.
Seville, which is the venue of the General Assembly, is the capital city of the autonomous region of Andalusia, and perhaps makes up one of the major parts of our history, with links to Roman and Arabic culture. Furthermore, its folklore has given rise to the typical or maybe topical image of Spain all over the world.
It is situated in the southwest of the Peninsula, and is only six metres (23 ft) above sea level. It has more than 700,000 inhabitants and normally has an average temperature of 26ºC in summer and 12ºC in winter (20ºC in May).
It was in the XVth Century at Puerto de Indias (Indies Port), after the discovery of the Americas, that trade was monopolised with the New World.
Seville is the cradle of poets such as Antonio Machado and painters such as Bartolomé Esteban Murillo and Diego de Velázquez among others. The air is filled with the scent of jasmine and lemon blossom in the spring. Furthermore, it has many monuments. It is worth pointing out some of these such as the Cathedral, the Reales Alcázares (declared a World Heritage site), la Torre de oro (Gold Tower), called this because of its golden reflection on the Guadalquivir river, the Basílica de la Macarena and the Plaza de España, located in the centre of the María Luisa park, the green lung of the city.
Seville, a festival city par excellence, is famous all over the world for its Easter processions and its April Festival in which flamenco and sevillanas become the beat of the city to the sound of guitars and castanets.
In 2008, the Spanish insurance market registered a total amount of €59,011,000 in premiums.
There are 77 insurance undertakings in Spain in the motor insurance sector and all of them are members of the Spanish Bureau, obtaining a total amount of €12,319,000 in premiums.
Have a nice stay in Spain.
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60 years already...
(by Alain Pire)
Recommendation No.5 adopted on the 25th January 1949 by the Working Party on Road Transport of the Inland Transport Committee of the UNECE is considered as the starting point for the Green Card system. It has therefore been sixty years since the basic principles of the system were adopted. On reading the document published hereafter it is clear that these principles still apply.
- Recommendation No.5
- Certificate of insurance
- Settlement of claims
- The Consolidated Resolution on the Facilitation of International Road Transport
Since its creation, one of the major aims of the Inland Transport Committee is to facilitate International Road Transport. In this context, all national legislation making civil liability insurance obligatory originating from the use of motor vehicles, is seen as obstructing the development of International Road Traffic. In fact, in order for this legislation to be effective, that is to say so that it protects all road traffic accident victims, it is essential that it applies to all vehicles circulating in the territory of the State which adopted such legislation. It must also apply to vehicles coming from abroad. The drivers of these vehicles must therefore, when crossing the border, take out an insurance contract which corresponds to the criteria set out by the legislation in the country visited. This possibility exists in the form of frontier insurance. However, it is regarding a solution which is not particularly practical and which is costly.
Is there another, less restrictive solution, and which is therefore more favourable to the development of International Road Transport? Yes. It is the subject of the proposal contained within Recommendation no. 5 of the Road Transport Committee. This proposal consists of releasing the driver of the foreign vehicle from the obligation of taking out a national contract at the border if they possess an international certificate of insurance: the Green Card. This certificate represents “an insurance which will cover all liabilities against which insurance is compulsory in the country visited, incurred in that country by persons responsible under the law of that country, for injury or damage to third parties” and which is accepted “without any other formality or cost, as evidence of an insurance complying with the compulsory insurance law” by the authorities of the country visited.
The Green Card is basically a certificate of insurance but of a specific type as it is destined to be used and recognised in a country other than that in which it was issued. To this effect, the authors of the Recommendation thought it a good idea to entrust their issue to a government recognised central organisation and established, in each country, by the insurers: the Bureau. However, its distribution among policyholders is entrusted to insurers.
It is certainly a specific part of the system which is worth highlighting. A private organisation established by the insurers and recognised by the government is authorised to issue insurance certificates which will be recognised as proof of valid insurance in the country visited, based on agreements signed between the various Bureaux.
Recommendation No. 5 is not limited to facilitating the crossing of borders, it also organises the settlement of claims. The recommendation entrusts the protection of injured parties through the use of vehicles which are the subject of a Green Card to the Bureau of the country visited. This Bureau is then authorised, on the basis of the authorisation given to them by the Bureau which issued the Green Card, “to accept service of legal proceedings in respect of any claim”. The Bureau can also deal with and, if the case arises, settle the claim regarding the certificate holder for the account of the Bureau which provided it. When dealing with a claim it will take into account the conditions of the insurance policy to the extent that it is compatible with the country’s compulsory insurance law. The compensation paid, along with the expenses and fees agreed will be fully reimbursed to the Bureau. To this effect, the Member States concerned will undertake not to obstruct the transfer of necessary currency for the settlement of the debts incurred as per the terms of agreements between Bureaux.
Recommendation No. 5 as such no longer exists. Its content now appears in Annex 1 of The Consolidated Resolution on the Facilitation of International Road Transport adopted in 2004 by the Road Transport Committee. The reading of this annex shows that, with the exception of the point devoted to the Council of Bureaux and the point inviting the Member States to conclude agreements between them allowing for the withdrawal of the Green Card border checks, all the basic principles written in Recommendation No.5 remain applicable. This is quite admirable.
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The Correspondents
(by Françoise Dauphin)
Whether referring to insurers or claims handling agencies, correspondents now manage the majority of Green Card claims. Indeed, insurers have many matters to hand over to a representative in the other countries which are part of the Green Card System in whom they trust, who knows the law of the country of the accident and who, when it comes to managing their claims, will manage them in their best interest. They also hope to have maximum freedom in their relationship with correspondents.
These expectations are perfectly legitimate. Furthermore, the new Internal Regulations have largely taken these into account. The Bureaux must accept them and not compete with the correspondents. Moreover, we can state that, in general terms, this systems works rather well.
Nevertheless, the Bureaux are sometimes faced with situations where there are, to varying degrees, defaults on the part of correspondents. However, the foundations of the Green Card System, put in place by the UN, rest on the fact that the Bureaux are ultimately the guarantors of the compensation of victims and that they would fail the mission assigned to them by the international community (and by their government which officially recognises them as guarantors) if they do not resolve dysfunctions noted.
It is therefore a delicate balance that Bureaux must face because they cannot find any answers in the Internal Regulations nor any answers regarding the room for manoeuvre which they have available to them nor do they find the answer via the tools they could use to successfully carry out their mission on protecting victims.
It is the reason which led the CoB to ask a working group to put forward proposals with the aim of helping the Bureaux with this plan.
The working group has just finished its reports. Their proposals, which were the subject of a large consultation (Bureaux, insurers by way of the CEA, claims handling agencies), will be submitted for approval at the General Assembly in Seville.
To provide the most accurate reply possible to Bureaux concerns, the group looked to the results of a consultation which the majority of them replied to.
On this basis, the group developed a “Correspondents Charter” which should constitute as a reference text for all things regarding the correspondents.
The Charter recalls that the relationship between insurers and correspondents is unrestricted. This freedom is only valid when the basic rules of the Green Card System, which are translated in the mandate given by the Bureau to the correspondent, are respected by all parties concerned.
These intangible principles are written in the Charter, which furthermore specifies the conditions in which the Bureaux give, refuse or revoke authorisation and are dealt with in the same manner as regards the rights and obligations of Bureaux and correspondents. Finally, the Charter puts forward solutions that the Bureaux could put into practice in the event of an issue identified by a correspondent.
This Charter should appear on the Bureaux websites with the intention of providing sound information and for the sake of transparency.
Furthermore, it is certainly desirable that the rights and obligations of each Bureau are allocated to a contractual document in order to avoid as many disputes as possible. The group has therefore developed a “management and settlement convention” that the Bureaux could ask the Bureaux to sign when they agree on their authorisation.
Finally, the group wished to provide a framework for the growing practice of outsourcing (that is to say when the authorised correspondent has the claims files dealt with by another entity). For the Council of Bureaux, it is not about prohibiting this practice (which could, in certain cases, turn out to be beneficial for the victims) but rather to manage it so that it is transparent and secure for all involved, above all for the injured parties.
These are the types of documents which will be submitted for approval at the General Assembly. It is about tools which have been made available to the Bureaux who wish to have them. On the one hand, they allow for a better-harmonised interpretation of the principles which govern the relationship between Bureaux and correspondents. However, on the other hand, they must be adapted to the situation of each market. Indeed, given the diversity of these, it was not deemed reasonable to go beyond the recommendations in that field.
It is not for the Bureaux to establish an overly detailed check on correspondents. It is about creating a transparent framework which at best foresees the disputes which will delay dealing with the claims, which ensures that there are no restrictions in the relationships between the insurers and the correspondent but which allows the Bureau to assume, in a responsible fashion, its mission as guarantor for the compensation of victims in the event of problems.
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The Russian Green Card Bureau
(by Sergey Razuvan)
The Russian Green Card Bureau was established in 2006 by way of the resolution of the General Meeting of Russian Association of Motor Insurers (RAMI) to activate an application for membership of the Green Card System.
All the following steps for affiliation were taken by RAMI according to the requirements and criteria stipulated by the Green Card System. Thus, in order to harmonise the Russian law with the system requirements, the Federal Law “On Compulsory Motor Third Party Liability Insurance” No. 40-FZ dated 25.04.2002 was properly amended in December 2007.
In March 2008, the Russian Federation Government passed a Resolution which acknowledged RAMI as the Russian Green Card Bureau and the required undertaking letter was sent to the UNECE and to the Council of Bureaux.
Finally, on 29 May 2008 by the resolution of the General Assembly of the Council of Bureaux, RAMI was admitted to the Green Card system with the right to start operations in the system from 1 January, 2009. On the same day, the RAMI Presidium passed a resolution to establish the Green Card Bureau as a structural unit of the RAMI, to be strategically controlled by the Bureau members.
Structure and members of the Bureau
The Bureau has very stringent membership rules. The members of the Bureau shall be insurance companies which are full members of the RAMI and, in addition, shall comply with the Bureau membership requirements set out by Federal Law 40-FZ and the RAMI professional rules, in particular:
- to pay a contribution amounting to €500,000 to the fund formed by the RAMI;
- to meet the financial obligations under the Green Card system (10 year banking guarantee for 11 million Euros; excess of loss (€200,000) reinsurance contract);
- to have at least two years’ experience of CMTPL insurance operations and payments;
- to use an automated information system supporting Green Card insurance transactions;
- to comply with the norms of financial stability under the current Russian Law;
- to exercise Green Card insurance operations through the company authorised unit, to secure its employees’ compliance with the established requirements to the staff.
The Bureau has two corporate bodies that determine the strategy of the Bureau’s work. The highest body - the Green Card Bureau Members’ Meeting - shall carry out strategic planning. The exclusive power of the meeting shall include fixing a membership fee, the insurers’ admission to the Bureau and their exclusion from it.
The second body is the Bureau Board which carries out the general control of the Bureau and its members. The Chairperson of the Board is Nadezhda Arshinova, who is General Director of the Twenty First Century Joint Stock Insurance Company.
The Bureau operations are run by the Bureau’s Administration. The key function of the Bureau’s Administration is to organise the settlement of claims of accidents caused by foreign Green Card holders, to secure claims reimbursements on Russian Green cards as well as to provide assistance to Russian drivers in traffic accidents in European countries.
To fulfill this aim, the Bureau’s Administration set up the RAMI Information Centre, of which services are available 24/7 by tel. +7 (495) 641 27 87.
If you would like to find out more about the members of the Bureau of RAMI, settling claims in Russia or about the procedure of appointing correspondents in Russia, we invite you to visit our website at:
http://autoins.ru/ru/greencard/en/correspondents
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The implication of the CoB Secretariat in the 4th Motor Insurance Directive
(by Caroline Maion)
The CoB Secretariat has been providing facilities and secretarial services for the administration of agreements signed between the 4th Motor Insurance Directive Bodies, notably the EEA Guarantee Funds and the Compensation Bodies since the 2006 Rotterdam Conference of the Guarantee Funds and Compensation Bodies. It is expected that those services will also be extended to the EEA Information Centres in the near future after having reached an agreement with the CEA on this matter.
The 4th Motor Insurance Directive (Directive 2000/26/EC of 16 May 2000) has been in force since July 2002 and has been mainly aimed at improving the settlement of claims for accidents taking place outside the Member State of residence of the injured party (“visiting victim”) by way of the setting up of new mechanisms: it allows the visiting victim to bring claims in his/her language to entities established in his/her own Member State of residence.
To this effect, the Directive provides for specific mechanisms such as:
All insurance undertakings covering motor third party liability which have to appoint a claims representative in all Member States to which the visiting victim can revert to in order to receive compensation for damages.
All Member States have to establish or authorise a Compensation Body which is responsible for compensating the visiting victim in the following cases:
- when the insurer of the liable party has not appointed any claims representative in the Member State where the visiting victim resides;
- when the visiting victim has not received any reasoned reply from the insurer of the liable party or its claims representative within a period of three months;
- when the vehicle liable for the accident is not insured or not identified (or its insurance undertaking is not identified).
An Information Centre also had to be established by each Member State and is responsible for:
- keeping a register with or coordinating the compilation and dissemination of information such as
o the registration number of the vehicle,
o its motor third party liability insurance policy number,
o insurance companies and their claims representatives,
o and, when applicable, the list of vehicles exempt from MTPL cover & the details of the body covering those vehicles.
- assisting entitled persons (victims, insurers, Compensation Bodies, Guarantee Funds…) to have access to that kind of information.
Finally, the Directive also refers to the Guarantee Fund which is the body established in each Member State in accordance with the 2nd Motor Insurance Directive (Directive 84/5/EEC of 30th December 1983) and which compensates in certain cases accidents caused by uninsured or unidentified vehicles.
It is worth noting that the 4th Motor Insurance Directive Bodies entered into various agreements to enhance their respective cooperation and to improve the handling of claims related to cross border accidents.
The core agreement is certainly the 2002 Agreement signed between the EEA Compensation Bodies and between them and the EEA Guarantee Funds as provided for by Article 6 of the 4th Motor Insurance Directive and which was extended respectively in 2004 and 2006 in accordance with the latest enlargement of the EU. The main aim of this agreement has been to define the respective tasks and obligations of these bodies and the procedure of reimbursement in the event of a claims settlement.
This agreement was then followed by an Implementing Regulation voluntarily signed in 2006 by the EEA Compensation Bodies and the Guarantee Funds during the Rotterdam Conference which provided for more details for the implementation of the 2002 Agreement and which has set up an Implementation Committee responsible for its smooth operation. The Implementing Regulation was amended in November 2008 during the Rome Conference and the name of the Implementation Committee has been changed to Coordination Committee to better reflect the tasks effectively accomplished by this committee.
The cooperation between the EEA Compensation Bodies and Guarantee Funds was fine-tuned during their 2008 Conference in Rome by the signature of Working Arrangements which are aimed at giving a legal and organisational framework to the annual conferences and to the Coordination Committee. They also provided for the role of the CoB Secretary General and for the financial aspects for the running of the CoB Secretariat.
Some of the EEA Guarantee Funds1 have also signed some specific agreement on a voluntary basis such as the 1995 Convention on recourse in case of insolvency of a motor liability insurer operating in the Single Market. This convention covers the specific case of insolvency of an insurance undertaking operating by way of branch or freedom to provide services in one or more Member States: it allows for the compensation by the signatory Guarantee Fund of the home Member State to the signatory Guarantee Fund of the Member State(s) where such undertaking operates.
During the 2008 Conference in Rome, 20 EEA Guarantee Funds and Compensation Bodies2 voluntarily agreed to sign another convention on insolvency, namely the Agreement in the event of the insolvency of an insurance undertaking providing civil liability motor insurance in the Single Market. Unlike the 1995 Convention, this Agreement which was extended afterwards to MT & FL defines the tasks and obligations of the signatory Compensation Bodies and Guarantee Funds, as well as the reimbursement procedure, related to the compensation of a visiting victim who suffers damages following an accident involving a vehicle insured by an insolvent insurance undertaking and who requested the intervention of its Compensation Body.
The EEA Information Centres also signed an Agreement on the exchange of information under Article 5 of the 4th Motor Insurance Directive on a voluntary basis in 2003 and under the aegis of the CEA which was extended in 2004 to the 10 new EU Member States and in 2008 to RO & CH. It seems that this agreement is to be extended to BG too.
In light of these various agreements, the Council of Bureaux provides secretarial assistance to the Coordination Committee and any possible resulting working group such as the Ad Hoc Working Group on 4th MID related issues. Since 2007, it also assists the Compensation Body/Guarantee Fund organising the Annual Conference.
An Annual Conference between the EEA Compensation Bodies and Guarantee Funds has been taking place every year since 2004. This is an important moment since it allows for the gathering of all these bodies and for fruitful discussions on topics of mutual interest. The first meeting of this kind was held in Brussels in 2004 and followed in 2005 by the Conference in Paris which paved the way for enhanced cooperation between the 4th MID Bodies. In 2006, the Rotterdam Conference allowed for the signature of the Implementing Regulation and mandated the CoB Secretariat to provide secretarial services to the Compensation Bodies and to the Guarantee Funds. During the 2007 Annual Conference in Madrid, the 1995 Agreement between Guarantee Funds on insurers’ insolvency was extended to 8 Member States. The Rome Conference in November 2008 allowed for the signature of three agreements, namely the Working Arrangements, the updated version of the Implementing Regulation and the Agreement on Insolvency. The next annual conference will take place in Warsaw on 8 October 2009.
The Coordination Committee (ex Implementation Committee) has been meeting twice a year since June 2007 (in autumn and spring) to discuss various matters of interest (e.g. despatched vehicles, exempt vehicles…). It is composed of 11 members appointed by and among the EEA Guarantee Funds and Compensation Bodies. Its next meeting will be held on 22nd April 2009.
An Ad-Hoc Working Group on 4th MID related issues was established and mandated by the Coordination Committee to work on a common understanding of the meaning of reasoned reply and on best practices related to Article 6 of the 4th Motor Insurance Directive. The Working Group has met three times and has recently finalised some guidelines for the Compensation Bodies which will be submitted for the consideration of the Coordination Committee during its April meeting.
There is also a Working Group on Information Centres which usually meets once a year to discuss various matters of interest (e.g.: the future of the Velia Protocol, etc. ). It is expected that in a near future the CoB Secretariat could provide secretarial services for this working group too.
Last but not least, the CoB Secretariat broadened its secretarial services last year by setting up a website dedicated to the 4th Motor Insurance Directive, see: http://www.4directive.org
Some useful information is already available for the public and for the Guarantee Funds and Compensation Bodies (see area related to Signatories). The CoB Secretariat also wishes in the future to extend this website to the Information Centres and to the claims representatives.
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1 BE, DE, DK, ES, FR, GB, GR, IE, NL, PT, AT, FI, SE, IT extended in 2008 to CY, CZ, EE, HU, PL SK, SI &CH/FL.
2 Except HU, RO, SE, EE, GB, IE, NO & IS.
Next meetings
June 2009
- 5th June 2009, Meeting of the Monitoring Committee (Bratislava)
- 16th June 2009, Meeting of the Working Group on Art. 9 (Brussels)
- 17th June 2009, Meeting of the Financial Stability Working Group (Brussels)
September 2009
- 23rd September 2009, Meeting of the Working Group on Data Protection (Brussels)
- 29th & 30th September 2009, Strategy Day & Meeting of the Management Committee (Brussels)
October 2009
- 22nd October 2009, Meeting of the General Rules Committee (Brussels)
- 23rd October 2009, Meeting of the Specific Rules Committee (Brussels)
November 2009
- 26th November 2009, Meeting of the Management Committee (Brussels)