Compulsory motor liability insurance was established in Europe between the First and Second World Wars in order to ensure the necessary indemnity for the traffic victims.

As a result of the increasing number of motorists within the booming tourist industry considerations were already made prior to the Second World War on the perspective of the extension of the territorial coverage of insurance abroad.

Following the Second World War the recently established United Nations or rather its Economic Commission for Europe (UN EEC), situated in Geneva, started to deal with this issue. Their aim was twofold:

• To establish a system that would ensure that none of the traffic victims in European countries should get into a worse position just because the accident was caused by a motor vehicle registered abroad.

• To ensure that the entry of people to other countries by car should not be delayed because the prevailing insurance regulations within that country are different from those in their home country.

This problem could have been solved by the harmonisation of the liability insurance laws of the European countries, however, this could not be expected in the near future.

On 25th January 1949 the working group of the UN dealing with this subject, namely the Principal Working Party on Road Transport of the Inland Transport Committee of the Economic Commission for Europe of the United Nations drafted its Recommendation No. 5 suggesting the adoption of the Scandinavian model that was already running since 1926. Essentially, it has been recommended that central insurance organisations of countries with compulsory motor liability insurance should follow the Swedish pattern. This means introducing the Green Card as the certificate of liability insurance guarantee; and these organisations should conclude an agreement with each other enabling them to settle in lieu of the foreign insurance companies the losses caused by foreigners.