EU court judgment could result in increased motor insurance premiums in the UK

The Federation of British Historic Vehicle Clubs (FBHVC) that represents classic car interests in the UK is very much aware of this matter. Information will probably be included in the next FBHVC newsletter. Our NEWS item provides a prompt report with links you can follow if you wish to learn more of this motor insurance development and a DfT consultation attached to their paper.

Clearly the DfT could see it was not something we (motorists in the UK) wanted but until we Brexit the wretched EU directives are an imposition that have to be complied with. On scan-reading the paper and related links my initial reaction was one of glazed boredom! If it had been after 6pm I would have gone and poured myself a malt and began thinking of more interesting matters. Many might think that to see mobility scooters and bicycles required to have insurance would be a very good idea. I was nearly mown down by a wrinkly the other day on a mobility scooter riding round a corner on a pavement with an air of casual unconcern about any pedestrian and seemed deaf to my shout "look out you speed hog!". The anarchy of some cyclists on public roads is a frequent cause for concern.

If you have a family member suffering from insomnia then printing off a copy of the DfT consultation document for their reading before going to sleep or on waking during the night, is an almost certain cure and should have them dozing off within minutes!

Posted: 161222
The UK Government is reviewing the law governing motor insurance which would provide a route for compensation for victims of accidents involving motor vehicles in a wider range of circumstances whist trying to keep the cost-burden to a minimum. The UK Department for Transport (DfT) has released a consultation document saying they "were prompted to review this area of UK law because of a legal case heard by the European courts in 2014 which resulted in what is known as the "Vnuk judgment". The DfT document sets out how the insurance provisions in UK domestic legislation work at the moment and then explains why the Vnuk judgment means the UK Government cannot maintain the law as it stands. Although the UK will in due course be leaving the EU, until we do so all the rights and obligations that EU membership entails remain.

Why should you be concerned by what appears a very tiresome document?
Well simply that some of the options that will have to be examined to determine what the UK Government will do to comply with this European court judgment (ECJ) could result in a significantly increased burden for the Motor Insurance Bureau (MIB) role as a fund of last resort when insurance claims are not covered by the scope of cover provided by a motor insurance policy or uninsured drivers. The consequence would then be that the additional MIB funding burden would be passed to insurers and of course then passed to UK policyholders in the form of raised motor insurance premiums.

The SORN implications from options that might be needed to meet the judgement are a real concern as most SORNS are used by classic car enthusiasts whose cars are not yet covered by the rolling 40 year VED exemption. At present a car on a SORN does not have to be insured for third party risks - that might change or the SORN conditions might need to be changed. The DfT consultation document sets out the options and some of the implications.

An additional worry is that under the comprehensive option implementing the EU judgment, the potential for an increase in fraudulent claims has been identified as an unwanted risk. Section 9 of the DfT paper discusses how that risk might be assessed and how the risk of fraud might be reduced should the comprehensive measures be adopted by the UK Government to comply with the EU requirement. With all the "crash-for-cash" claims we have seen in the UK in recent years, most of which have clearly been fraudulent, the recent Autumn Budget statement included measures to reduce that miserable area of activity which has had the unwelcome effect of raising motor insurance premiums by a significant sum each year.

The DfT document also mentions a sunset clause to remove the legislation that might have been enacted by the time Brexit occurs.

DfT: Technical consultation on motor insurance: consideration of the European Court of Justice ruling in the case of Damijan Vnuk v Zavarovalnica d.d (C-162/13). More

Weightmans - The implications of the Vnuk case. The implications of the Vnuk ruling - the recent ECJ case which means that cars driven solely on private property may need to be insured in future and all motor insurance policies amended. More

Motor Insurance Bureau (MIB) is to reduce the level and impact of uninsured driving in the UK, to compensate victims of uninsured and untraced drivers fairly and promptly, and to provide first class data asset management and specialist claims services. Claims are dealt with by the MIB The MIB is a fund of last resort and so will look to an insurer to deal wherever possible. MIB is funded by a levy on every motor insurance policy taken out currently around £30 per policy. In 1991 MIB took £50m levy from UK motor insurers, in 2005 this levy was £330m. The MIB is not for profit organisation. More