The European Commission has just started a review of the legal regime of compulsory motor insurance put in place by the Motor Insurance Directive EC/2009/103 (the MID). The review is the wider REFIT evaluation of all aspects of the MID and is open for responses until 20 October. It therefore runs in parallel with the shorter four week consultation about the inception impact assessment (IIA) for the MID, about which we provided this update last week (25 July).
The Commission’s evaluation questionnaire is split into section A for consumer responses and section B for businesses involved in motor insurance to respond. The only material differences are that the questions in B frame the issues in a little more detail.
There is no certainty about the timing of any Commission activity after the REFIT exercise closes. But it is a wide and substantial initiative and it should therefore be expected that proposals to amend the Directive in at least some areas (such as those raised by the Vnuk case, perhaps?) could emerge in due course.
With no clarity about the how the UK’s motor insurance regime might stack up against MID when the UK leaves the EU in March 2019 it is going to be ‘business as usual’ for the next year and a half or so. On that basis, the MID will remain a critical piece of legislation over the medium term for those involved in UK motor insurance business and we would strongly recommend reading the REFIT evaluation and responding, either as individual business or through trade associations and other cross-stakeholder groups.
We will be organising a briefing on the MID REFIT at our London office after the summer break and well before the October deadline for responses. Invitations will be issued by early September but please get in touch directly if you would like to attend.
In the meantime, we have set out certain important aspects of the REFIT evaluation below.
Some issues to consider in the motor insurance REFIT?
The Commission notes that “The REFIT evaluation shall look into all elements of the MID and covers both the evaluation and the Impact Assessment.” Even though all of the MID is in scope, eight areas are identified as of particular focus. These are set out below, with the red type indicating those points also specifically addressed in the IIA published last week (and to which responses are due by 21 August).
Areas of focus within MID addressed by REFIT evaluation closing on 20 October 2017:
(i) Portability of claims history statements
(ii) Possible guarantees towards victims in cases of insurer's insolvency
(iii) Minimum cover amounts
(iv) Insurance checks
(vi) Scope of MID
(vii) Autonomous cars
(viii) Transfer of vehicles
The REFIT paper runs to 15 pages (compared to the five pages of the IIA) and is open for response until 20 October. Those must be filed using the online response facility at the evaluation’s home page here.
On insurer insolvency, it seems clear that the recent example of Setanta Insurance, a Maltese motor insurer which provided policies in Ireland on a freedom of services basis and that went into insolvency, was at the front of the Commission’s thinking. The paper notes that “several stakeholders suggested amending EU legislation to ensure that the guarantee fund of the Member State of the insolvent insurer bears the costs stemming from the claims of this insurer. The issue needs to be considered from two angles – first from the point of view of the injured party as to in which Member State s/he should claim compensation and second as to which Member State should eventually pay the final bill.”
The paper also points out that there is no standardisation of arrangements which may offer protection in the event of insurer insolvency: “There is currently no guarantee at EU level that victims get full compensation in such cases and Member States are free to limit it.”
The scope of MID headings highlights the debate following the Vnuk case. There is little point in paraphrasing the direct questions asked at that heading (in section B).
Q27: Should the protection provided under MID include liability for accidents irrespective where they occur, thus both on public roads and private property?
Q28: In light of the Vnuk ruling, should it be left to the discretion of individual Member States to exempt certain natural or legal persons, certain public or private vehicles, certain types of vehicles or vehicles bearing special number plates that normally fall under MID, provided that the victims are otherwise compensated? If not, why not and what action should be taken?
Q29: What types of vehicles, if any, should be excluded from the scope of MID at EU level?
Q30: Should compulsory MTPL [i.e. motor third party liability] insurance cover accidents resulting from agricultural, construction, industrial, motor sports or fairground activities?
Q31: Should compulsory MTPL insurance cover accidents that occur on areas that the public are not allowed (legally) to access?
In respect of autonomous cars, the paper asks if they should be insured against liability to victims (sic) in the same way as cars which are driven? The position to be taken in UK legislation will be that they should, with compulsory motor insurance to be extended by statute (the Automated and Electric Vehicles Bill is due to be introduced this year) so that the motor insurer is liable, in the first instance, to anyone suffering losses from automated driving.