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BIBA raises concerns on EC’s Motor Insurance Directive refit evaluation

IBR Staff Writer Published 28 May 2018

The British Insurance Brokers’ Association (BIBA) has raised concerns on the European Commission's (EC) proposed on changes to the Motor Insurance Directive.

The new proposals give policyholders more rights and ensure that they receive full compensation they are due, even when the insurer is insolvent. But, BIBA and ABI expressed concerns about the proposals.

European Commission financial stability, financial services and capital markets union vice president Valdis Dombrovskis said: "we are ensuring that victims of motor vehicle accidents will be better protected in future.”

 The proposals also state that when people move across borders and buy new motor insurance in another EU Member State, their claims history will be treated in the same way as they were domestic customers.

EC’ proposals also talk about uninsured driving, where it stated that Member States' powers to combat uninsured driving will be reinforced. This should help to tackle uninsured driving which increases premiums for honest motorists.

According to the proposals, EU citizens will also benefit from the same level of minimum protection when travelling in the EU. As per this proposal, harmonised minimum protect levels for personal injury and material damage across the EU, on par with current minimum levels differ slightly between Member States will be given.

BIBA technical services manager Martin Bridges said: “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’.  

“This leaves considerable uncertainty for potentially vulnerable customers wondering if they now need to buy insurance for a disability vehicle.”

BIBA executive director Graeme Trudgill stated that after the original Vnuk ruling, BIBA, the UK Government and several other EU states and insurance bodies have presented a solution that would have brought more clarity to this situation and prevented such potentially unintended consequences.

He also stated that the Commission’s proposal includes a key suggestion, which offers 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.


Image: EC’s new motor insurance proposals were criticized by insurance industry. Photo: Courtesy of BIBA.