Last week we outlined the changes being proposed by the European Commission, which it believes will strengthen European Union rules on motor insurance. The feedback period has begun, and perhaps we can liken the response to a head-on collision.
Of all the areas touched by the proposal – insurer insolvency, claims history statements, uninsured driving, minimum cover, and scope – it is the last that has been slammed the hardest. There is continued opposition to the much-talked-about idea of widening the scope of the Motor Insurance Directive to include off-road vehicles.
For the European Commission, accidents caused during the normal use of a vehicle – regardless of whether it is on private land – for the purpose of transportation, should be covered by the directive. That means compulsory motor insurance for the likes of tractors.
Reacting to the proposal, the feedback period for which runs until July 19, the British Insurance Brokers’ Association (BIBA) has voiced its apprehensions.
“The EC is proposing to clarify the definition of ‘use of a vehicle’ and incorporate the judgements of the Court of Justice of the European Union in the cases of Vnuk, Rodrigues de Andrade, and Torreiro,” said BIBA in its response. “The proposal is to change the definition to ‘use of a vehicle means any use of such vehicle, intended normally to serve as a means of transport, that is consistent with the normal function of that vehicle, irrespective of the vehicles characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion’.
“While the EC has indicated that the proposal clarifies the concept of use and where compulsory insurance therefore applies, BIBA still has concerns over the application of this definition which we believe still lacks clarity.”
BIBA technical services manager Martin Bridges explained: “Relating the need for compulsory motor insurance to rely on operating in respect of any ‘use, intended normally as a means of transport, consistent with the normal function of the vehicle… irrespective of the terrain…’ will potentially still bring many more vehicles into scope from mobility scooters to motorsports because of the possible legal interpretation of the definition of ‘transport’.”
He added that this will leave “considerable uncertainty for potentially vulnerable customers wondering if they now need to buy insurance for a disability vehicle.”
The Association of British Insurers (ABI) previously described the plan as unnecessary, unworkable, and unfair while the International Underwriting Association of London (IUA) had warned of fraud and widespread uninsured driving.
“Following the original Vnuk ruling BIBA, the UK government, a number of other EU states, and insurance bodies put forward a solution that would have brought considerably more clarity to this situation and prevented these potential unintended consequences,” noted executive director Graeme Trudgill, as part of BIBA’s reaction released shortly after the proposal was published. “In the Commission’s roadmap document one of the key suggestions was to consider changing the definition of a vehicle to ‘one used in traffic’.
“This would have resolved many of the issues, however, the EC has moved towards motor insurance being the compulsory solution for liability wherever a vehicle is used – effectively including on private land. This goes beyond current UK legislation.”
In the UK, users of forklift trucks and similar vehicles on private property only need public and employer’s liability insurance.
“We intend to continue to express our concerns that these proposals may increase bureaucracy, cost, and uncertainly for personal and commercial policyholders, resulting in potentially significant unintended consequences in areas such as motorsports and for vehicles not previously requiring motor insurance,” stated Trudgill.
Meanwhile in terms of claims history statements, BIBA – while it welcomes the equality of treatment across Member States – has sounded alarm bells as to how this might be carried out.
It said: “BIBA believes that any prescriptive requirement for uniformity will create an administrative burden, significant IT system changes and add cost into a system which already works well in the UK.”