European Parliament adopts welcome pragmatic approach to motor insurance reform

Despite Brexit being very much to the foreground, the usual business of the European institutions goes on in the background. This week, for example, the Parliament voted in plenary session on a range of reforms to the Motor Insurance Directive.

Matters have been developing ever since the Court’s decision in Vnuk v Zararovalnica in 2014 and gained fresh momentum with publication of the Commission’s recommendations last May. We have covered this topic extensively as it progressed.

One difficult aspect of the Commission’s recommendations (which we reported on here) was its attempt to codify the very wide interpretation of compulsory motor insurance adopted by the court in recent years in cases from Vnuk onwards. That approach raised very real uncertainties for insuring motor sports activities in particular and in connection with other specialist vehicles such as agricultural or construction plant – and even ride-on lawn mowers.

The Parliament has now adopted – by 562 to 36, with 19 abstentions – a report from its Internal Market Committee (IMCO) which takes what we think is a more pragmatic approach to the scope of compulsory motor insurance, by seeking to restrict it to those vehicles which are subject to the type approval regime and to their “use in traffic … as a means of transport at the time of the accident.” Vehicles used exclusively for motor sports in a closed area would also be excluded from compulsory cover. The IMCO report also covers: arrangements for dealing with claims arising from the insolvency of an insurer in another member state, claims histories, minimum amounts of cover and non-obtrusive checks on insurance. The Parliament’s press release of 13 February provides a useful summary of these issues.

Differences between the Parliament’s approach and that favoured by the Commission will have to be ironed out via what the press release neutrally refers to as “inter-institutional negotiations”. The timetable for those is not yet clear, but resolution before the European elections in May 2019 does not look all that realistic at the moment. But whatever the outcome is and whenever it is reached we believe it will definitely have an effect on future motor insurance arrangements in the UK despite the UK’s departure on from the EU on 29 March.

Please do get in touch if you would like any further information on the IMCO report, the possible next steps in Europe and the likely read-across to UK motor insurance law.


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Alistair Kinley, director of policy and government affairs
alistair.kinley@blmlaw.com

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