Last week brought an important development affecting all drivers on the road. The Constitutional Court reviewed several provisions within traffic insurance law and annulled three specific articles of those regulations. Drivers should pay attention to the provisions that were invalidated.
Which Provisions Were Annulled?
Last week, the Constitutional Court struck down certain provisions contained in the scope of traffic insurance. One of the annulled provisions was particularly significant. These articles carry weight both legally and for drivers’ rights. Under an amendment made in 2016, compensations payable under traffic insurance were determined by general conditions. As a result, the method for calculating compensation for those who died in traffic accidents and the subsequent payment amounts to relatives were regulated according to those general conditions. The calculation method had been left to be defined by the Ministry of Treasury and Finance. The Constitutional Court ruled that compensation calculations cannot be left to general conditions and must be governed by law, and therefore annulled the relevant provision.
The annulment is directly relevant to drivers. The measure added to a omnibus bill in 2016 deserves closer scrutiny. At that time, traffic insurance prices rose by as much as 150 percent. Court decisions were cited as the reason. Because there was no clearly defined legal standard for calculating death compensations under traffic insurance, courts set varying compensation amounts case by case. Consequently, insurers sometimes paid too little and sometimes too much. The system also encouraged the emergence of intermediaries who sought higher payouts: they would intervene in lawsuits expecting low initial insurance offers and negotiate higher settlements with drivers or their relatives.
How Will Compensation Be Paid?
Because insurers were making payments based on fluctuating amounts, they raised premium rates and the cost of obtaining traffic insurance increased. The Ministry of Treasury and Finance intervened and, under the 2016 legislation, tied payable compensations to general conditions. Under that arrangement, the ministry determined traffic insurance compensation payments. However, with last week’s Constitutional Court decision, that arrangement was annulled and the system returned to the pre-2016 state.
Courts Will Decide Compensation
After reviewing the applications, the court determined that the phrase referring to general conditions in the relevant law should be removed. The reasoning stated that the rules under challenge failed to regulate the liabilities arising from insurers’ mandatory financial liability insurance contracts, leaving this scope described by the vague expression “general conditions.” The decision emphasized that the insurer’s obligation under traffic insurance cannot be made subject to arbitrary change by the administration, and that insurance companies do not have unilateral authority to determine compensation amounts — these matters must be resolved by the courts. The ruling also highlighted that, regarding financial liability insurance, drivers’ interests must be prioritized and insurers cannot exploit the situation; payments under a policy, including the premiums collected, should correspond to the responsibilities defined for covering damages in the event of an accident or death.
Accordingly, courts will now determine the amounts payable to third parties for damages or compensation in traffic accidents. This change affects everyone with traffic insurance and will be reflected in new traffic insurance policies going forward.