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2003 EN Official Journal of the European Union C 155 E/51

(2003/C 155 E/057) WRITTEN QUESTION E-2768/02

by Kathleen Van Brempt (PSE) to the Commission

(1 October 2002)

Subject: Pay-as-you-drive

From 2004, the British insurer Norwich Union wishes to introduce a pay-as-you-drive car insurance
scheme in Europe. The idea is that insurance premiums should be calculated on the basis of the actual use
made of a vehicle. Cars would have to be equipped with a system which recorded locations and routes

What is the Commission’s view of this initiative?

Does the Commission agree with Norwich Union that this system will make insurance premiums more
equitable and cheaper for people who do not use their cars so much?

Will the Commission take measures to regulate this new insurance formula, and if so, what measures?

Answer given by Mr Bolkestein on behalf of the Commission

(14 November 2002)

The Commission sees no problem from the insurance perspective with an insurer introducing a ‘pay-as-
you-drive’ system, as mentioned by the Honourable Member, for the calculation of premiums for motor
insurance contracts. Indeed, the objective of adjusting the amount of the premium to actual vehicle use
may be beneficial for policyholders in general terms, provided the driver remains properly insured.

However, as the Honourable Member may be aware, the Community legislative framework for financial
services including insurance products, is based on the principle of freedom of tariff. The Commission
therefore believes that the cost of motor insurance premiums should be determined by the market. The
Commission does not consider that its role is to take measures to impose a particular method of premium
calculation, as suggested by the Honourable Member, but rather to improve the efficiency of the single
insurance market as described in the Financial Services Action Plan. The Commission is persuaded that
increased competition should help the consumer to find lower prices, as well as a wider and innovative
choice of product.

However, the proposed method may raise data protection concerns in view of the General Data Protection
Directive 95/46/EC (1) and the new Directive 2002/58/EC on Privacy and electronic communications (2), in
particular with regard to the proportionality principle and the specific provisions on the use of location
data. It is therefore advisable that anybody developing such an instrument should do so in close
consultation with their Data Protection Authority to ensure that it is in conformity with Data Protection

(1) Directive 95/46/EC of the Parliament and of the Council of 24 October 1995 on the protection of individuals with
regard to the processing of personal data and on the free movement of such data  OJ L 281, 23.11.1995.
(2) Directive 2002/58/EC of the Parliament and of the Council of 12 July 2002 concerning the processing of personal
data and the protection of privacy in the electronic communications sector  OJ L 201, 31.7.2002.