Here we have an update on the Bill to amend retained EU law relating
to compulsory insurance for the use of motor vehicles and for connected
purposes. It effectively restates the position under the Road
Traffic Act 1988 in respect of the definition of a motor vehicle
and where compulsory insurance is required.
What does Vnuk mean?
Vnuk is a 2014 European Court of Justice (ECJ) ruling on the case
of a Slovenian farmer, Mr Vnuk, who was knocked off his ladder by
a reversing tractor-trailer on a private farm in 2007. The ruling
directed that the compulsory motor insurance requirement must be extended
to include vehicles being used on private land, as well as a greater
range of vehicles potentially including those used in motorsports,
agricultural machinery and light electric vehicles (LEV).
This contrasts sharply with the scope of the domestic compulsory insurance
requirement (in Great Britain) under the Road Traffic Act 1988 (RTA),
which is limited to accidents on roads and other public places and
has a narrower definition of motor vehicle. Implementing
Vnuk would have been costly, in the region of £2 billion (covering
existing motorcars, existing motorcycles, existing business vehicles,
motorsports and other business), according to the Government Actuarys
Department (GAD). Focusing just on existing motorcars, GAD calculates
that insurance policyholders could face an estimated additional cost
of £1.227 billion if Vnuk was implemented expressed as
a potential increase in individual insurance premiums of around £50
for 25 million consumers.
In order to remove the impact of the Vnuk decision from GB law,
primary legislation is required and a slot to introduce this was sought
at the earliest possible opportunity. The bill is progressing through
the UK Parliament. Posted: 220112
of Vnuk for UK policyholders
The UK Government has estimated that implementing the ECJ
ruling in the Vnuk case would cost policyholders £1.227
billion or an average rise of around £50
in the premiums of 25 million customers. PwC consultant Mohammed
Khan said it could result in the average motor insurance policy
rising between £5 and £20. The UK left the European
Single Market on 31st December 2020. Because the ECJ ruling
was before this date, it has effect in the UK, unless the UK
decides to change the law to reverse it.
In order to remove the impact of the Vnuk decision from
GB law, primary legislation is required and a slot to introduce
this was sought at the earliest possible opportunity. The bill
is progressing through the UK Parliament.
Overview of the Bill
The UK Government has been clear since the 2014 decision of
the Court of Justice of the European Union (CJEU) in the case
of Vnuk, that it does not support the extension of the
requirement for compulsory motor insurance to private land,
and to a greater range of vehicles not constructed for road
use. The Vnuk decision extends the requirement for compulsory
third- party motor insurance under Directive 2009/103/EC beyond
that in the law of Great Britain as set out in the Road Traffic
Act 1988 (RTA). The requirement in the RTA only applies to vehicles
used on roads and other public places, and to motor vehicles,
defined as a mechanically propelled vehicle intended or
adapted for use on roads.
In February 2021, the Government announced its intention to
remove the Vnuk decision from the law of England and Wales and
the law of Scotland, and reiterated this in a Written Ministerial
Statement on 29th June 2021. This Bill contains measures to
support this commitment.
The purpose of this Bill is to:
> End the effect of the Vnuk decision in retained EU law,
and that of related retained case law;
> End any associated liability for insurance claims against
the Motor Insurers Bureau (MIB) in respect of accidents
on private land and for vehicles not constructed for road use.
The Motor Vehicles (Compulsory Insurance) Bill also clarifies
that the case of Vnuk and any other case that followed the Vnuk
interpretation in respect of Article 3 and 10 of the 2009 Directive
is removed from retained case law within the meaning of section
6 of the European Union (Withdrawal) Act 2018 (EUWA).
On 5th January 2022 the Motor Vehicles (Compulsory
Insurance) Bill successfully passed through the Committee stage
in the House of Commons; a step towards removing the financial
burden of the CJEU decision on Vnuk case from UK motor insurers
and their customers.
The Presentation Bill describes itself as A Bill to amend
retained EU law relating to compulsory insurance for the use
of motor vehicles; and for connected purposes. It effectively
restates the position under the Road Traffic Act 1988 in respect
of the definition of a motor vehicle and where compulsory
insurance is required.
Following Vnuk and the subsequent case of Lewis v Tindale, the
UK motor insurance industry finds itself financially liable
(via the MIB levy) for accidents involving uninsured vehicles
in circumstances where compulsory insurance is not required.
This arises from the decisions in Vnuk and Lewis and the imposition
of EU law requirements which have been retained post-Brexit
by the European Union (Withdrawal) Act 2018. The new Bill
currently going through the UK Parliament will remove the lingering
effect of EU law in this area and re-state the position under
the 1988 Act where motor insurance is required only for the
use of motor vehicles on a road or other public place.
The Bill still has two further stages to go through in the Commons
before progressing its journey through the House of Lords. Its
progress will be monitored.
The next step
in the legislative process for the Bill is the Report stage
which provides an opportunity for the whole House of Commons
to discuss and amend the Bill. There is no set period between
the end of Committee stage and the start of Report stage and
accordingly no definitive timescale can be put around it but,
particularly given the absence of any Government activity on
this issue, the Bill is slowly but surely making its way
towards the statute books. With the Report stage usually
followed immediately on the same day by debate on the Bill's
Third reading, completion of all stages in the Commons may be
rapid although the Bill then still has to negotiate the
same stages in the House of Lords.
the Bill as it currently stands provides for it to come into
force two months after it is passed, it is even conceivable
that it could be in force later this year.