Latest negotiating update from EU Council on the Motor Insurance Directive

The most recent paper from the EU Council sets out its agreed negotiating position ahead of the legislative trilogue process (the other interlocutors being the Commission and the Parliament) aimed at amending the Motor Insurance Directive and scheduled for the first half of 2020. The question of the scope of the Directive is key.

The Council’s position – ie that adopted* by Member States collectively – appears to reflect much of the thinking set out in the Commission’s May 2018 review rather than the counter-proposals and refinements added by the Parliament’s February 2019 report.

Thus the Council’s view on the question of the scope of motor insurance, which turns on the definition of “use of vehicle” in the Directive, looks closer to the wide post-Vnuk approach of the Court of Justice in its recent case law and which the Commission was simply seeking to codify. The mandate suggests that motorsports activities should be excluded from compulsory motor insurance only if undertaken within closed areas and if adequate alternative public liability insurance is in place (although driver-to-driver liability would not be required to be covered). At first sight, this feels potentially more onerous than the blanket exclusion from the Directive that the Parliament favoured. Another notable difference with the Parliament’s report is that there is no reference to the concept of “use … in traffic”. Given that this was not supported by the Commission it may be that the idea has run its course.

In a further point on scope, the Council suggests excluding vehicles weighing less than 25kg or with design speeds of less than 25 km/h from the Directive. This looks to be aimed at facilitating the take-up and use of light electric vehicles and micro-mobility devices, notably e-scooters.

The Council’s position on the ultimate liability for motor insurer insolvency is perhaps less controversial in that it supports that resting in the Member State in which the insurer was regulated. The mandate sets out positions on the use of claims histories, cross-border insurance checks and on SORN-like arrangements which are also less controversial than the question of scope.

Detailed arrangements about scope, exclusions and derogations will obviously affect national guarantee funds such as the MIB. The challenge here is ensuring that national legislation on compulsory motor insurance is congruent with the Directive. Where the former is narrower than the latter (as is the case at present with the RTA 1988 and the post-Vnuk MID) the gap has the potential to lead to a funding issue.

The mandate proposes that at the conclusion of the legislative trilogue the amended Directive would not take effect until 24 months later, that being twice the period initially proposed by the Commission. In either case, the new measures look fairly certain to bite not just after the UK has left the EU on 31 January 2020 but also after the expiry of the transition period on 31 December 2020.

In our view it does not necessarily follow from either timescales that the measures in an amended MID will have no relevance to the UK’s future compulsory motor insurance regime. The realities of the UK’s 500km land border with Ireland and the important tourist and commercial traffic flowing daily across the Channel and the North Sea might well tend to suggest that the practical foundations of any post-Brexit Road Traffic Act should be pretty closely aligned to the pillars of the new EU regime which will result from the legislative trilogue process next year, which is anticipated by the publication of the Council’s mandate.

* This has hardly been a quick process. The introduction to the mandate notes that the position adopted reflects ten meetings during the last three Council Presidencies, ie eighteen months.


Alistair Kinley, Director of Policy & Government Affairs

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