The Lloyd’s Market Association (LMA) has cautioned the government against taking abrupt action over a court ruling that could shake up motor insurance in the UK.

 

The government previously called for input from the motor insurance sector following the 2014 “Vnuk judgement,” a European Court of Justice decision that broadened the scope of compulsory motor insurance.

 

If the court ruling will be applied to the UK, various vehicles currently not covered by the Road Traffic Act could be brought into scope and use of vehicles on private property may also require insurance in the future.

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The LMA has urged the government to delay action in connection with the court ruling until further consultation is made to consider how the possible increased cost and risk of fraud are mitigated.

 

The Department for Transport has proposed two actions, the first of which is a “comprehensive option” that will require UK insurers to comply with the European law as laid out by the “Vnuk judgement.”

 

Meanwhile, the second proposal is an “amended directive option” that would broaden the definition of a motor vehicle, but crucially, only require drivers to hold third party insurance on land that the public has access to, and not private land.

 

The LMA has challenged both proposals, branding the “comprehensive option” as “unworkable” and raising concerns about the “amended directive option.”

According to the trade body, the “amended directive option” will be difficult to enforce and could lead to increased fraud, resulting in higher costs for insurers and ultimately consumers.


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