All UK motor insurers will be required to have a nominated claims handling agent in each of the 15 European Union member states under a new proposed law.
The fourth EU Motor Insurance Directive will formalise ad hoc agreements between motor insurers in dealing with claims involving different member states.
Larger motor insurers, such as Royal & SunAlliance, already have their own reciprocal claims handling arrangements for UK policyholders involved in accidents abroad.
And RSA provides a packaged foreign claims management service to more than 100 non-UK insurers with drivers in the UK.
The directive will require all motor insurers to have a similar arrangement to RSA's.
The proposed Europe-wide law, which has to be ratified by all 15 member states, also paves the way for a database of motor insurance policyholders in EU countries.
The UK version of the database is due online in July 2001, and will allow the Motor Insurance Bureau to weed out false claims from drivers alleging they do not have motor cover.